LPTH
LightPath Technologies Inc
Price:  
2.65 
USD
Volume:  
116,670
United States | Electronic Equipment, Instruments & Components

LPTH WACC - Weighted Average Cost of Capital

The WACC of LightPath Technologies Inc (LPTH) is 6.8%.

The Cost of Equity of LightPath Technologies Inc (LPTH) is 6.85%.
The Cost of Debt of LightPath Technologies Inc (LPTH) is 5.8%.

RangeSelected
Cost of equity5.6% - 8.1%6.85%
Tax rate21.7% - 35.8%28.75%
Cost of debt4.6% - 7.0%5.8%
WACC5.6% - 8.0%6.8%
WACC

LPTH WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.380.57
Additional risk adjustments0.0%0.5%
Cost of equity5.6%8.1%
Tax rate21.7%35.8%
Debt/Equity ratio
0.010.01
Cost of debt4.6%7.0%
After-tax WACC5.6%8.0%
Selected WACC6.8%

LPTH'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 LPTH:

cost_of_equity (6.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.38) + 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.