FTEK WACC - Weighted Average Cost of Capital
The WACC of Fuel Tech Inc (FTEK) is 5.8%.
| Range | Selected | |
| Cost of equity | 5.4% - 8.2% | 6.8% |
| Tax rate | 3.4% - 4.4% | 3.9% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.1% - 6.5% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 8.2% |
| Tax rate | 3.4% | 4.4% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.1% | 6.5% |
| Selected WACC | 5.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FTEK | Fuel Tech Inc | 1.15 | 0.57 | 0.27 |
| APGI | American Power Group Corp | 0.43 | -0.51 | -0.36 |
| BRM.V | Biorem Inc | 0.13 | 0.92 | 0.83 |
| DSS | Document Security Systems Inc | 0.45 | -0.11 | -0.08 |
| GEVI | General Environmental Management Inc | 0.01 | 0.96 | 0.95 |
| JAN | Janone Inc | 0.03 | -1.07 | -1.04 |
| KUT.V | Redishred Capital Corp (Pre-Merger) | 0.39 | 0.01 | 0.01 |
| MEEC | Midwest Energy Emissions Corp | 0.18 | 0.54 | 0.46 |
| TOMZ | TOMI Environmental Solutions Inc | 0.14 | 0.85 | 0.75 |
| USRI | USA Recycling Industries Inc | 0.27 | -0.2 | -0.16 |
| WATR.L | Water Intelligence PLC | 0.2 | 0.04 | 0.03 |
| Low | High | |
| Unlevered beta | 0.01 | 0.27 |
| Relevered beta | 0 | 0.4 |
| Adjusted relevered beta | 0.33 | 0.6 |
FTEK'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 FTEK:
cost_of_equity (6.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.