The WACC of FibroGen Inc (FGEN) is 12.7%.
| Range | Selected | |
| Cost of equity | 9.50% - 14.90% | 12.20% |
| Tax rate | 0.10% - 0.20% | 0.15% |
| Cost of debt | 4.80% - 20.90% | 12.85% |
| WACC | 5.7% - 19.7% | 12.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.23 | 1.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 14.90% |
| Tax rate | 0.10% | 0.20% |
| Debt/Equity ratio | 4.24 | 4.24 |
| Cost of debt | 4.80% | 20.90% |
| After-tax WACC | 5.7% | 19.7% |
| Selected WACC | 12.7% | |
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 FGEN:
cost_of_equity (12.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.23) + 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.