FEIM WACC - Weighted Average Cost of Capital
The WACC of Frequency Electronics Inc (FEIM) is 6.1%.
| Range | Selected | |
| Cost of equity | 6.7% - 9.3% | 8% |
| Tax rate | 1.9% - 7.3% | 4.6% |
| Cost of debt | 4.5% - 4.5% | 4.5% |
| WACC | 5.5% - 6.7% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.62 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.7% | 9.3% |
| Tax rate | 1.9% | 7.3% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.5% | 4.5% |
| After-tax WACC | 5.5% | 6.7% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FEIM | Frequency Electronics Inc | 1.05 | 0.42 | 0.21 |
| BNSO | Bonso Electronics International Inc | 0.23 | 0.55 | 0.45 |
| DGLY | Digital Ally Inc | 35.71 | 1.48 | 0.04 |
| IMTE | Integrated Media Technology Ltd | 1.78 | -1.19 | -0.43 |
| LCTC | Lifeloc Technologies Inc | 0.21 | 0.39 | 0.32 |
| LPTH | LightPath Technologies Inc | 0.01 | 1.01 | 1 |
| MRM.CN | Micromem Technologies Inc | 0.13 | 0.42 | 0.37 |
| PHO.TO | Photon Control Inc | 0 | 1.62 | 1.61 |
| PNG.V | Kraken Robotics Inc | 0.03 | 1.56 | 1.52 |
| TNLX | Trans Lux Corp | 0.8 | -0.6 | -0.33 |
| TRCK | Track Group Inc | 11.25 | 0.75 | 0.06 |
| Low | High | |
| Unlevered beta | 0.21 | 0.37 |
| Relevered beta | 0.43 | 0.69 |
| Adjusted relevered beta | 0.62 | 0.79 |
FEIM'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 FEIM:
cost_of_equity (8.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.62) + 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.