FFWM
First Foundation Inc
Price:  
5.26 
USD
Volume:  
448,688.00
United States | Banks
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FFWM WACC - Weighted Average Cost of Capital

The WACC of First Foundation Inc (FFWM) is 7.7%.

The Cost of Equity of First Foundation Inc (FFWM) is 9.65%.
The Cost of Debt of First Foundation Inc (FFWM) is 5.00%.

Range Selected
Cost of equity 8.40% - 10.90% 9.65%
Tax rate 27.20% - 28.30% 27.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.9% - 8.6% 7.7%
WACC

FFWM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.98 1.08
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 10.90%
Tax rate 27.20% 28.30%
Debt/Equity ratio 0.47 0.47
Cost of debt 5.00% 5.00%
After-tax WACC 6.9% 8.6%
Selected WACC 7.7%

FFWM'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 FFWM:

cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.98) + 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.