The WACC of Good Natured Products Inc (GDNP.V) is 9.6%.
| Range | Selected | |
| Cost of equity | 5.30% - 17.00% | 11.15% |
| Tax rate | 1.50% - 4.10% | 2.80% |
| Cost of debt | 7.00% - 12.70% | 9.85% |
| WACC | 6.8% - 12.3% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -1.59 | 0.43 |
| Additional risk adjustments | 9.5% | 10.0% |
| Cost of equity | 5.30% | 17.00% |
| Tax rate | 1.50% | 4.10% |
| Debt/Equity ratio | 34.63 | 34.63 |
| Cost of debt | 7.00% | 12.70% |
| After-tax WACC | 6.8% | 12.3% |
| Selected WACC | 9.6% | |
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 (11.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (-1.59) + risk_adjustments (9.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.