CTHR WACC - Weighted Average Cost of Capital
The WACC of Charles & Colvard Ltd (CTHR) is 5.9%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.1% | 6.25% |
| Tax rate | 10.8% - 28.0% | 19.4% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.9% - 5.9% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.24 | 0.32 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.4% | 7.1% |
| Tax rate | 10.8% | 28.0% |
| Debt/Equity ratio | 1.5 | 1.5 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.9% | 5.9% |
| Selected WACC | 5.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CTHR | Charles & Colvard Ltd | 1.5 | -13.99 | -6.26 |
| DLA | Delta Apparel Inc | 318.27 | 0.9 | 0 |
| DOGZ | Dogness International Corp | 0.02 | -0.17 | -0.17 |
| EVK | Ever-Glory International Group Inc | 15.82 | -0.19 | -0.01 |
| FORD | Forward Industries Inc | 0.07 | -1.86 | -1.76 |
| IFA.TO | iFabric Corp | 0.07 | -0.14 | -0.14 |
| JLMC | JLM Couture Inc | 0.41 | 0.22 | 0.16 |
| MENE.V | Mene Inc | 0.02 | 1.64 | 1.61 |
| TALN | Talon International Inc | 1.08 | -0.36 | -0.19 |
| TBLT | Toughbuilt Industries Inc | 0.16 | -0.01 | -0.01 |
| UNI.TO | Unisync Corp | 2.41 | 0.04 | 0.01 |
| Low | High | |
| Unlevered beta | -0.14 | -0.01 |
| Relevered beta | -0.13 | -0.01 |
| Adjusted relevered beta | 0.24 | 0.32 |
CTHR's CAPM model and how its cost of Equity is calculated
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 CTHR:
cost_of_equity (6.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.24) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.