ISBA
Isabella Bank Corp
Price:  
35.80 
USD
Volume:  
9,351.00
United States | Banks
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ISBA WACC - Weighted Average Cost of Capital

The WACC of Isabella Bank Corp (ISBA) is 7.9%.

The Cost of Equity of Isabella Bank Corp (ISBA) is 9.00%.
The Cost of Debt of Isabella Bank Corp (ISBA) is 5.00%.

Range Selected
Cost of equity 7.70% - 10.30% 9.00%
Tax rate 16.00% - 16.60% 16.30%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.9% - 8.9% 7.9%
WACC

ISBA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.84 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.70% 10.30%
Tax rate 16.00% 16.60%
Debt/Equity ratio 0.31 0.31
Cost of debt 5.00% 5.00%
After-tax WACC 6.9% 8.9%
Selected WACC 7.9%

ISBA'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 ISBA:

cost_of_equity (9.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.84) + 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.