FRMA WACC - Weighted Average Cost of Capital

The WACC of Firma Holdings Corp (FRMA) is 5.6%.

The Cost of Equity of Firma Holdings Corp (FRMA) is 164.30%.

The Cost of Debt of Firma Holdings Corp (FRMA) is 5.50%.

	Range	Selected
Cost of equity	109.80% - 218.80%	164.30%
Tax rate	14.20% - 29.60%	21.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.4% - 6.9%	5.6%

WACC

FRMA WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	23.03	38.2

Additional risk adjustments	0.0%	0.5%
Cost of equity	109.80%	218.80%

Tax rate	14.20%	29.60%
Debt/Equity ratio	109.28	109.28
Cost of debt	4.00%	7.00%

After-tax WACC	4.4%	6.9%


Selected WACC	5.6%

FRMA'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 FRMA:

cost_of_equity (164.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (23.03) + 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.