FLY WACC - Weighted Average Cost of Capital

The WACC of FLY Leasing Ltd (FLY) is 6.8%.

The Cost of Equity of FLY Leasing Ltd (FLY) is 6.70%.

The Cost of Debt of FLY Leasing Ltd (FLY) is 14.10%.

	Range	Selected
Cost of equity	5.50% - 7.90%	6.70%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	7.00% - 21.20%	14.10%
WACC	5.5% - 8.2%	6.8%

WACC

FLY WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.36	0.54

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.50%	7.90%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.04	0.04
Cost of debt	7.00%	21.20%

After-tax WACC	5.5%	8.2%


Selected WACC	6.8%

FLY'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 FLY:

cost_of_equity (6.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.