The WACC of Findev Inc (FDI.V) is 9.8%.
| Range | Selected | |
| Cost of equity | 6.50% - 11.00% | 8.75% |
| Tax rate | 28.70% - 32.80% | 30.75% |
| Cost of debt | 15.60% - 15.60% | 15.60% |
| WACC | 8.8% - 10.8% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.52 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.50% | 11.00% |
| Tax rate | 28.70% | 32.80% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 15.60% | 15.60% |
| After-tax WACC | 8.8% | 10.8% |
| Selected WACC | 9.8% | |
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 FDI.V:
cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.52) + 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.