The WACC of Cyclo Therapeutics Inc (CYTH) is 6.7%.
Range | Selected | |
Cost of equity | 7.0% - 9.8% | 8.4% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 7.0% - 7.0% | 7% |
WACC | 6.1% - 7.4% | 6.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.67 | 0.88 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.0% | 9.8% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 7.0% | 7.0% |
After-tax WACC | 6.1% | 7.4% |
Selected WACC | 6.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
CYTH | Cyclo Therapeutics Inc | 0.51 | 0.86 | 0.62 |
ABBV | Abbvie Inc | 0.21 | 0.35 | 0.31 |
AMGN | Amgen Inc | 0.42 | 0.35 | 0.27 |
BIOC | Biocept Inc | 2.11 | 1.23 | 0.48 |
GILD | Gilead Sciences Inc | 0.22 | 0.32 | 0.27 |
MYMX | Mymetics Corp | 1796275.5 | 0.57 | 0 |
PKPH | Peak Pharmaceuticals Inc | 0.39 | 0.94 | 0.73 |
RCHA | Rich Pharmaceuticals Inc | 3.06 | 1.5 | 0.46 |
SBM.V | Sirona Biochem Corp | 0.14 | 1.61 | 1.46 |
SNGX | Soligenix Inc | 0.22 | 1.46 | 1.26 |
YECO | Yulong Eco-Materials Ltd | 16.63 | -0.31 | -0.02 |
Low | High | |
Unlevered beta | 0.31 | 0.48 |
Relevered beta | 0.51 | 0.82 |
Adjusted relevered beta | 0.67 | 0.88 |
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 CYTH:
cost_of_equity (8.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.67) + 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.