FNMA
Federal National Mortgage Association
Price:  
6.33 
USD
Volume:  
3,832,320.00
United States | Thrifts & Mortgage Finance
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FNMA WACC - Weighted Average Cost of Capital

The WACC of Federal National Mortgage Association (FNMA) is 11.1%.

The Cost of Equity of Federal National Mortgage Association (FNMA) is 58.55%.
The Cost of Debt of Federal National Mortgage Association (FNMA) is 13.95%.

Range Selected
Cost of equity 33.30% - 83.80% 58.55%
Tax rate 20.50% - 20.70% 20.60%
Cost of debt 4.00% - 23.90% 13.95%
WACC 3.2% - 19.0% 11.1%
WACC

FNMA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 6.39 14.09
Additional risk adjustments 0.0% 0.5%
Cost of equity 33.30% 83.80%
Tax rate 20.50% 20.70%
Debt/Equity ratio 576.77 576.77
Cost of debt 4.00% 23.90%
After-tax WACC 3.2% 19.0%
Selected WACC 11.1%

FNMA'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 FNMA:

cost_of_equity (58.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (6.39) + 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.