GVP WACC - Weighted Average Cost of Capital
The WACC of GSE Systems Inc (GVP) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.7% - 7.8% | 6.75% |
| Tax rate | 1.0% - 2.3% | 1.65% |
| Cost of debt | 7.0% - 7.1% | 7.05% |
| WACC | 5.8% - 7.8% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.4 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.7% | 7.8% |
| Tax rate | 1.0% | 2.3% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 7.0% | 7.1% |
| After-tax WACC | 5.8% | 7.8% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GVP | GSE Systems Inc | 0.09 | 3.09 | 2.84 |
| AKR.V | Ackroo Inc | 0.26 | -0.03 | -0.03 |
| ALIF | Artificial Life Inc | 255.35 | 2.68 | 0.01 |
| BLIN | Bridgeline Digital Inc | 0.02 | -0.1 | -0.1 |
| FLXI | Flexiinternational Software Inc | 0.09 | 0.27 | 0.25 |
| INUV | Inuvo Inc | 0 | 1.28 | 1.28 |
| ISDR | Issuer Direct Corp | 0.54 | 0.96 | 0.63 |
| NTWK | NetSol Technologies Inc | 0.23 | 0.41 | 0.33 |
| PCYG | Park City Group Inc | 0 | 0.15 | 0.15 |
| SEB.V | Smart Employee Benefits Inc | 0.54 | 1.56 | 1.02 |
| TEUM | Pareteum Corp | 206.35 | 0.8 | 0 |
| Low | High | |
| Unlevered beta | 0.15 | 0.33 |
| Relevered beta | 0.1 | 0.3 |
| Adjusted relevered beta | 0.4 | 0.53 |
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 (6.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.