The WACC of Chicken Soup for The Soul Entertainment Inc (CSSE) is 7.3%.
| Range | Selected | |
| Cost of equity | 16.30% - 200.10% | 108.20% |
| Tax rate | 0.60% - 1.30% | 0.95% |
| Cost of debt | 7.00% - 7.60% | 7.30% |
| WACC | 7.0% - 7.7% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.69 | 34.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.30% | 200.10% |
| Tax rate | 0.60% | 1.30% |
| Debt/Equity ratio | 1011.49 | 1011.49 |
| Cost of debt | 7.00% | 7.60% |
| After-tax WACC | 7.0% | 7.7% |
| Selected WACC | 7.3% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for CSSE:
cost_of_equity (108.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.69) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.