LUMO
Lumos Pharma Inc
Price:  
4.34 
USD
Volume:  
143,837.00
United States | Biotechnology
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LUMO WACC - Weighted Average Cost of Capital

The WACC of Lumos Pharma Inc (LUMO) is 7.4%.

The Cost of Equity of Lumos Pharma Inc (LUMO) is 9.85%.
The Cost of Debt of Lumos Pharma Inc (LUMO) is 5.00%.

Range Selected
Cost of equity 7.30% - 12.40% 9.85%
Tax rate 0.10% - 0.80% 0.45%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.2% - 8.7% 7.4%
WACC

LUMO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.76 1.35
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 12.40%
Tax rate 0.10% 0.80%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 6.2% 8.7%
Selected WACC 7.4%

LUMO'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 LUMO:

cost_of_equity (9.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.