The WACC of Good Natured Products Inc (GDNP.V) is 9.7%.
Range | Selected | |
Cost of equity | 5.4% - 26.5% | 15.95% |
Tax rate | 1.5% - 4.1% | 2.8% |
Cost of debt | 7.0% - 12.7% | 9.85% |
WACC | 6.8% - 12.6% | 9.7% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | -0.69 | 2.73 |
Additional risk adjustments | 5.0% | 5.5% |
Cost of equity | 5.4% | 26.5% |
Tax rate | 1.5% | 4.1% |
Debt/Equity ratio | 34.63 | 34.63 |
Cost of debt | 7.0% | 12.7% |
After-tax WACC | 6.8% | 12.6% |
Selected WACC | 9.7% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
GDNP.V | Good Natured Products Inc | 34.63 | -1.11 | -0.03 |
ADMT | ADM Tronics Unlimited Inc | 0.13 | -0.17 | -0.15 |
CHCC | China Chemical Corp | 2.04 | 0.26 | 0.09 |
CRKN | Crown Electrokinetics Corp. | 0.19 | 1.01 | 0.86 |
GLGI | Greystone Logistics Inc | 0.37 | -0.08 | -0.06 |
GURE | Gulf Resources Inc | 0.14 | -0.84 | -0.74 |
KBLB | Kraig Biocraft Laboratories Inc | 0.02 | 0.28 | 0.28 |
LOOP | Loop Industries Inc | 0.24 | 1.05 | 0.85 |
PRH.V | Pearl River Holdings Ltd | 1.9 | -0.45 | -0.16 |
TREC | Trecora Resources | 0.18 | 0.3 | 0.26 |
Low | High | |
Unlevered beta | -0.04 | 0.16 |
Relevered beta | -1.52 | 3.58 |
Adjusted relevered beta | -0.69 | 2.73 |
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 GDNP.V:
cost_of_equity (15.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (-0.69) + risk_adjustments (5.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.