The WACC of EVCI Career Colleges Holding Corp (EVCI) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.10% - 18.50% | 11.80% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 11.10% | 9.05% |
| WACC | 5.2% - 8.5% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | -1.02 | 1.21 |
| Additional risk adjustments | 6.0% | 6.5% |
| Cost of equity | 5.10% | 18.50% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 25.8 | 25.8 |
| Cost of debt | 7.00% | 11.10% |
| After-tax WACC | 5.2% | 8.5% |
| Selected WACC | 6.8% | |
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 EVCI:
cost_of_equity (11.80%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (-1.02) + risk_adjustments (6.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.