NMI WACC - Weighted Average Cost of Capital
The WACC of Nuveen Municipal Income Fund Inc (NMI) is 6.4%.
| Range | Selected | |
| Cost of equity | 7.3% - 10.9% | 9.1% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.5% - 7.3% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.75 | 1.08 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 10.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.5% | 7.3% |
| Selected WACC | 6.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NMI | Nuveen Municipal Income Fund Inc | 1.02 | 3.55 | 2.04 |
| BRPA | Big Rock Partners Acquisition Corp | 0.04 | 0.12 | 0.12 |
| CHAQ | Chardan Healthcare Acquisition 2 Corp | 0.01 | 1.02 | 1.02 |
| EFF | Eaton Vance Floating-Rate Income Plus Fund | 0.46 | 0.71 | 0.53 |
| EVY | Eaton Vance New York Municipal Income Trust | 0.53 | 0.15 | 0.11 |
| FSLF | First Eagle Senior Loan Fund | 0.39 | 0.51 | 0.4 |
| MZA | Blackrock Muniyield Arizona Fund Inc | 0.6 | 0.24 | 0.17 |
| NTWN | Newtown Lane Marketing Inc | 0 | 1.07 | 1.07 |
| ROCC | Roth CH Acquisition II Co | 0.39 | 1.05 | 0.82 |
| VCF | Delaware Investments Colorado Municipal Income Fund Inc | 0 | 0.31 | 0.31 |
| ZGYH | Yunhong International | 0.02 | 1.09 | 1.08 |
| Low | High | |
| Unlevered beta | 0.4 | 0.82 |
| Relevered beta | 0.63 | 1.12 |
| Adjusted relevered beta | 0.75 | 1.08 |
NMI'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 NMI:
cost_of_equity (9.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.