The WACC of Harvest Capital Credit Corp (HCAP) is 7.2%.
Range | Selected | |
Cost of equity | 8.1% - 11.5% | 9.8% |
Tax rate | 1.0% - 3.6% | 2.3% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.5% - 8.0% | 7.2% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 4.2% | 5.2% |
Adjusted beta | 1.18 | 1.41 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.1% | 11.5% |
Tax rate | 1.0% | 3.6% |
Debt/Equity ratio | 1.11 | 1.11 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.5% | 8.0% |
Selected WACC | 7.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
HCAP | Harvest Capital Credit Corp | 1.11 | 1.21 | 0.58 |
AAB.TO | Aberdeen International Inc | 0.01 | 0.86 | 0.86 |
EQS | EQUUS Total Return Inc | 3.49 | -0.28 | -0.06 |
FNR.V | 49 North Resources Inc | 1.84 | 0.3 | 0.11 |
FW.V | Flow Capital Corp | 1.33 | 0.29 | 0.13 |
HODL.CN | Cypherpunk Holdings Inc | 0.07 | 2.09 | 1.96 |
MEDI.CN | Myconic Capital Corp | 0 | 1.07 | 1.06 |
NFD.A.V | Northfield Capital Corp | 0.12 | 1.01 | 0.9 |
WCM.A.TO | Wilmington Capital Management Inc | 0 | -0.1 | -0.1 |
Low | High | |
Unlevered beta | 0.22 | 0.8 |
Relevered beta | 1.27 | 1.61 |
Adjusted relevered beta | 1.18 | 1.41 |
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 HCAP:
cost_of_equity (9.80%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.18) + 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.