DFH
Dream Finders Homes Inc
Price:  
22.74 
USD
Volume:  
261,599.00
United States | Household Durables
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DFH WACC - Weighted Average Cost of Capital

The WACC of Dream Finders Homes Inc (DFH) is 8.0%.

The Cost of Equity of Dream Finders Homes Inc (DFH) is 9.45%.
The Cost of Debt of Dream Finders Homes Inc (DFH) is 7.15%.

Range Selected
Cost of equity 8.30% - 10.60% 9.45%
Tax rate 20.10% - 22.50% 21.30%
Cost of debt 6.10% - 8.20% 7.15%
WACC 7.0% - 9.0% 8.0%
WACC

DFH WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.96 1.03
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.30% 10.60%
Tax rate 20.10% 22.50%
Debt/Equity ratio 0.6 0.6
Cost of debt 6.10% 8.20%
After-tax WACC 7.0% 9.0%
Selected WACC 8.0%

DFH'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 DFH:

cost_of_equity (9.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.96) + 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.