The WACC of General Datacomm Industries Inc (GNRD) is 5.3%.
| Range | Selected | |
| Cost of equity | 4.10% - 34,786.70% | 17,395.40% |
| Tax rate | 3.90% - 11.20% | 7.55% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.8% - 6.8% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -2.24 | 6209.16 |
| Additional risk adjustments | 10.5% | 11.0% |
| Cost of equity | 4.10% | 34,786.70% |
| Tax rate | 3.90% | 11.20% |
| Debt/Equity ratio | 64716.02 | 64716.02 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.8% | 6.8% |
| Selected WACC | 5.3% | |
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 GNRD:
cost_of_equity (17,395.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-2.24) + risk_adjustments (10.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.