LFT
Lument Finance Trust Inc
Price:  
2.41 
USD
Volume:  
355,691
United States | Mortgage Real Estate Investment Trusts (REITs)

LFT WACC - Weighted Average Cost of Capital

The WACC of Lument Finance Trust Inc (LFT) is 13.3%.

The Cost of Equity of Lument Finance Trust Inc (LFT) is 6.45%.
The Cost of Debt of Lument Finance Trust Inc (LFT) is 14.5%.

RangeSelected
Cost of equity5.5% - 7.4%6.45%
Tax rate0.1% - 0.4%0.25%
Cost of debt5.1% - 23.9%14.5%
WACC5.2% - 21.5%13.3%
WACC

LFT WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.360.45
Additional risk adjustments0.0%0.5%
Cost of equity5.5%7.4%
Tax rate0.1%0.4%
Debt/Equity ratio
6.326.32
Cost of debt5.1%23.9%
After-tax WACC5.2%21.5%
Selected WACC13.3%

LFT'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 LFT:

cost_of_equity (6.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.