The WACC of Ethema Health Corp (GRST) is 11.6%.
| Range | Selected | |
| Cost of equity | 4.60% - 317.50% | 161.05% |
| Tax rate | 9.10% - 19.80% | 14.45% |
| Cost of debt | 4.00% - 23.90% | 13.95% |
| WACC | 3.6% - 19.5% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -1.58 | 54.4 |
| Additional risk adjustments | 8.0% | 8.5% |
| Cost of equity | 4.60% | 317.50% |
| Tax rate | 9.10% | 19.80% |
| Debt/Equity ratio | 904.87 | 904.87 |
| Cost of debt | 4.00% | 23.90% |
| After-tax WACC | 3.6% | 19.5% |
| Selected WACC | 11.6% | |
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 GRST:
cost_of_equity (161.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-1.58) + risk_adjustments (8.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.