FAMI WACC - Weighted Average Cost of Capital
The WACC of Farmmi Inc (FAMI) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.0% - 21.6% | 13.8% |
| Tax rate | 1.6% - 3.4% | 2.5% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.4% - 10.0% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.45 | 2.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 21.6% |
| Tax rate | 1.6% | 3.4% |
| Debt/Equity ratio | 3.59 | 3.59 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.4% | 10.0% |
| Selected WACC | 7.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FAMI | Farmmi Inc | 3.59 | 0.31 | 0.07 |
| ASRE | Astra Energy Inc | 1.03 | 1.65 | 0.82 |
| BIQIF | BIQI International Holdings Corp | 213616.16 | 0 | 0 |
| BSFC | Blue Star Foods Corp | 0.77 | 1.76 | 1 |
| OGO.V | Organto Foods Inc | 1.19 | -0.42 | -0.19 |
| PME | Pingtan Marine Enterprise Ltd | 16.8 | -0.71 | -0.04 |
| UMAM | Umami Sustainable Seafood Inc | 0.85 | 0.57 | 0.31 |
| 002311.SZ | Guangdong Haid Group Co Ltd | 0.11 | 1.42 | 1.28 |
| 300498.SZ | Wens Foodstuff Group Co Ltd | 0.24 | 1.18 | 0.96 |
| 603288.SS | Foshan Haitian Flavouring and Food Co Ltd | 0 | 1.35 | 1.34 |
| Low | High | |
| Unlevered beta | 0.21 | 0.88 |
| Relevered beta | 0.18 | 3.96 |
| Adjusted relevered beta | 0.45 | 2.98 |
FAMI'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 FAMI:
cost_of_equity (13.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.45) + 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.