ISSC WACC - Weighted Average Cost of Capital
The WACC of Innovative Solutions and Support Inc (ISSC) is 7.1%.
| Range | Selected | |
| Cost of equity | 6.0% - 9.0% | 7.5% |
| Tax rate | 21.0% - 22.6% | 21.8% |
| Cost of debt | 4.8% - 4.8% | 4.8% |
| WACC | 5.8% - 8.4% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.46 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 9.0% |
| Tax rate | 21.0% | 22.6% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.8% | 4.8% |
| After-tax WACC | 5.8% | 8.4% |
| Selected WACC | 7.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ISSC | Innovative Solutions and Support Inc | 0.11 | 1.66 | 1.52 |
| AERG | Applied Energetics Inc | 0 | -0.04 | -0.04 |
| ASTC | Astrotech Corp | 0.02 | 0.3 | 0.3 |
| FLY.V | FLYHT Aerospace Solutions Ltd | 0.52 | -0.76 | -0.54 |
| GIGA | Giga-tronics Inc | 294.6 | -0.3 | 0 |
| MRS.V | Mission Ready Solutions Inc | 1.29 | 1.89 | 0.94 |
| NTS.V | Nanotech Security Corp | 0.01 | -0.04 | -0.04 |
| OPXS | Optex Systems Holdings Inc | 0.01 | 1.05 | 1.04 |
| TIKK | Tel-Instrument Electronics Corp | 0.06 | 0.31 | 0.3 |
| VTSI | VirTra Inc | 0.11 | 1.74 | 1.6 |
| Low | High | |
| Unlevered beta | 0.18 | 0.55 |
| Relevered beta | 0.19 | 0.6 |
| Adjusted relevered beta | 0.46 | 0.73 |
ISSC'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 ISSC:
cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + 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.