IRWD
Ironwood Pharmaceuticals Inc
Price:  
0.57 
USD
Volume:  
5,000,143.00
United States | Biotechnology
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

IRWD WACC - Weighted Average Cost of Capital

The WACC of Ironwood Pharmaceuticals Inc (IRWD) is 6.7%.

The Cost of Equity of Ironwood Pharmaceuticals Inc (IRWD) is 23.70%.
The Cost of Debt of Ironwood Pharmaceuticals Inc (IRWD) is 5.50%.

Range Selected
Cost of equity 17.20% - 30.20% 23.70%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 7.00% 5.50%
WACC 4.9% - 8.5% 6.7%
WACC

IRWD WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.89 4.53
Additional risk adjustments 0.0% 0.5%
Cost of equity 17.20% 30.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 6.33 6.33
Cost of debt 4.00% 7.00%
After-tax WACC 4.9% 8.5%
Selected WACC 6.7%

IRWD'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 IRWD:

cost_of_equity (23.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.89) + 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.