NIQ WACC - Weighted Average Cost of Capital

The WACC of Nuveen Intermediate Duration Quality Municipal Term Fund (NIQ) is 40.9%.

The Cost of Equity of Nuveen Intermediate Duration Quality Municipal Term Fund (NIQ) is 11.90%.

The Cost of Debt of Nuveen Intermediate Duration Quality Municipal Term Fund (NIQ) is 77.75%.

	Range	Selected
Cost of equity	10.10% - 13.70%	11.90%
Tax rate	6.10% - 13.50%	9.80%
Cost of debt	23.90% - 131.60%	77.75%
WACC	16.4% - 65.4%	40.9%

WACC

NIQ WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.35	1.58

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.10%	13.70%

Tax rate	6.10%	13.50%
Debt/Equity ratio	1.07	1.07
Cost of debt	23.90%	131.60%

After-tax WACC	16.4%	65.4%


Selected WACC	40.9%

NIQ'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 NIQ:

cost_of_equity (11.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.35) + 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.