FF
FutureFuel Corp
Price:  
4.21 
USD
Volume:  
438,846.00
United States | Chemicals
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FF WACC - Weighted Average Cost of Capital

The WACC of FutureFuel Corp (FF) is 5.8%.

The Cost of Equity of FutureFuel Corp (FF) is 7.50%.
The Cost of Debt of FutureFuel Corp (FF) is 5.00%.

Range Selected
Cost of equity 5.80% - 9.20% 7.50%
Tax rate 8.50% - 25.20% 16.85%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.2% - 6.5% 5.8%
WACC

FF WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.41 0.77
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.80% 9.20%
Tax rate 8.50% 25.20%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 5.2% 6.5%
Selected WACC 5.8%

FF'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 FF:

cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.41) + 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.