IOU.V WACC - Weighted Average Cost of Capital

The WACC of Iou Financial Inc (IOU.V) is 7.2%.

The Cost of Equity of Iou Financial Inc (IOU.V) is 7.15%.

The Cost of Debt of Iou Financial Inc (IOU.V) is 7.80%.

	Range	Selected
Cost of equity	6.20% - 8.10%	7.15%
Tax rate	2.90% - 5.60%	4.25%
Cost of debt	7.00% - 8.60%	7.80%
WACC	6.4% - 8.1%	7.2%

WACC

IOU.V WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.47	0.52

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	8.10%

Tax rate	2.90%	5.60%
Debt/Equity ratio	0.25	0.25
Cost of debt	7.00%	8.60%

After-tax WACC	6.4%	8.1%


Selected WACC	7.2%

IOU.V'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 IOU.V:

cost_of_equity (7.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.