The WACC of Ebix Inc (EBIX) is 11.1%.
| Range | Selected | |
| Cost of equity | 40.90% - 60.90% | 50.90% |
| Tax rate | 7.60% - 10.60% | 9.10% |
| Cost of debt | 4.70% - 10.20% | 7.45% |
| WACC | 7.9% - 14.2% | 11.1% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 7.35 | 9.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 40.90% | 60.90% |
| Tax rate | 7.60% | 10.60% |
| Debt/Equity ratio | 9.19 | 9.19 |
| Cost of debt | 4.70% | 10.20% |
| After-tax WACC | 7.9% | 14.2% |
| Selected WACC | 11.1% | |
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 EBIX:
cost_of_equity (50.90%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (7.35) + 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.