JPI
Nuveen Preferred and Income Term Fund
Price:  
20.22 
USD
Volume:  
16,549.00
United States | N/A
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JPI WACC - Weighted Average Cost of Capital

The WACC of Nuveen Preferred and Income Term Fund (JPI) is 8.2%.

The Cost of Equity of Nuveen Preferred and Income Term Fund (JPI) is 11.20%.
The Cost of Debt of Nuveen Preferred and Income Term Fund (JPI) is 6.55%.

Range Selected
Cost of equity 9.20% - 13.20% 11.20%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 9.10% 6.55%
WACC 6.3% - 10.1% 8.2%
WACC

JPI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.17 1.48
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.20% 13.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.87 0.87
Cost of debt 4.00% 9.10%
After-tax WACC 6.3% 10.1%
Selected WACC 8.2%

JPI'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 JPI:

cost_of_equity (11.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.17) + 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.