LCTC
Lifeloc Technologies Inc
Price:  
3.21 
USD
Volume:  
310.00
United States | Electronic Equipment, Instruments & Components
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LCTC WACC - Weighted Average Cost of Capital

The WACC of Lifeloc Technologies Inc (LCTC) is 6.0%.

The Cost of Equity of Lifeloc Technologies Inc (LCTC) is 6.35%.
The Cost of Debt of Lifeloc Technologies Inc (LCTC) is 5.50%.

Range Selected
Cost of equity 5.40% - 7.30% 6.35%
Tax rate 22.40% - 24.00% 23.20%
Cost of debt 4.00% - 7.00% 5.50%
WACC 5.0% - 6.9% 6.0%
WACC

LCTC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.33 0.43
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.40% 7.30%
Tax rate 22.40% 24.00%
Debt/Equity ratio 0.21 0.21
Cost of debt 4.00% 7.00%
After-tax WACC 5.0% 6.9%
Selected WACC 6.0%

LCTC'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 LCTC:

cost_of_equity (6.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.