DSPG WACC - Weighted Average Cost of Capital
The WACC of Dsp Group Inc (DSPG) is 7.6%.
| Range | Selected | |
| Cost of equity | 6.3% - 8.9% | 7.6% |
| Tax rate | 8.0% - 26.7% | 17.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.3% - 8.9% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.75 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.3% | 8.9% |
| Tax rate | 8.0% | 26.7% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.3% | 8.9% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DSPG | Dsp Group Inc | 0 | 0.9 | 0.9 |
| EMAN | eMagin Corp | 0.09 | 1.49 | 1.38 |
| INTC | Intel Corp | 0.54 | 1.78 | 1.2 |
| MRAM | Everspin Technologies Inc | 0.96 | 1.38 | 0.74 |
| OIIM | O2micro International Ltd | 1.04 | 0.62 | 0.32 |
| PTK.V | POET Technologies Inc | 0 | 0.3 | 0.3 |
| SESI | SES Solar Inc | 59111.51 | -12.43 | 0 |
| SQNS | Sequans Communications SA | 2.05 | 0.86 | 0.31 |
| TGAN | Transphorm Technology Inc | 0.04 | 1.66 | 1.6 |
| WISA | Summit Wireless Technologies Inc | 0.98 | -5.44 | -2.9 |
| Low | High | |
| Unlevered beta | 0.32 | 0.81 |
| Relevered beta | 0.63 | 0.87 |
| Adjusted relevered beta | 0.75 | 0.91 |
DSPG'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 DSPG:
cost_of_equity (7.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.75) + 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.