The WACC of Environmental Power Corp (EPGRQ) is 5.5%.
| Range | Selected | |
| Cost of equity | 4.10% - 1,043.10% | 523.60% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.0% - 7.0% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -225.6 | 0.04 |
| Additional risk adjustments | 1038.0% | 1038.5% |
| Cost of equity | 4.10% | 1,043.10% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 29600.87 | 29600.87 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.0% | 7.0% |
| Selected WACC | 5.5% | |
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 EPGRQ:
cost_of_equity (523.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-225.6) + risk_adjustments (1,038.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.