GVP
GSE Systems Inc
Price:  
4.59 
USD
Volume:  
132,051.00
United States | Software
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GVP WACC - Weighted Average Cost of Capital

The WACC of GSE Systems Inc (GVP) is 7.6%.

The Cost of Equity of GSE Systems Inc (GVP) is 7.65%.
The Cost of Debt of GSE Systems Inc (GVP) is 7.05%.

Range Selected
Cost of equity 6.10% - 9.20% 7.65%
Tax rate 1.00% - 2.30% 1.65%
Cost of debt 7.00% - 7.10% 7.05%
WACC 6.1% - 9.0% 7.6%
WACC

GVP WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.48 0.78
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.10% 9.20%
Tax rate 1.00% 2.30%
Debt/Equity ratio 0.09 0.09
Cost of debt 7.00% 7.10%
After-tax WACC 6.1% 9.0%
Selected WACC 7.6%

GVP's CAPM model and how its cost of Equity is calculated

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 GVP:

cost_of_equity (7.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.