The WACC of FTS International Inc (FTSI) is 8.7%.
| Range | Selected | |
| Cost of equity | 10.80% - 13.90% | 12.35% |
| Tax rate | 0.80% - 0.80% | 0.80% |
| Cost of debt | 5.10% - 5.10% | 5.10% |
| WACC | 7.9% - 9.5% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.8 | 1.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.80% | 13.90% |
| Tax rate | 0.80% | 0.80% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.10% | 5.10% |
| After-tax WACC | 7.9% | 9.5% |
| Selected WACC | 8.7% | |
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 FTSI:
cost_of_equity (12.35%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.8) + 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.