The WACC of Neuberger Berman Mlp and Energy Income Fund Inc (NML) is 8.9%.
Range | Selected | |
Cost of equity | 8.8% - 11.0% | 9.9% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 7.8% - 10.0% | 8.9% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.07 | 1.09 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.8% | 11.0% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0.2 | 0.2 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 7.8% | 10.0% |
Selected WACC | 8.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
NML | Neuberger Berman Mlp and Energy Income Fund Inc | 0.2 | 3.55 | 3.09 |
ACKIU | Ackrell SPAC Partners I Co | 0.01 | 0.99 | 0.98 |
CFAC | CF Finance Acquisition III Corp | 0 | 1.05 | 1.04 |
ESSC | East Stone Acquisition Corp | 0.05 | 1.05 | 1.01 |
GIX | GigCapital2 Inc | 0 | 1.05 | 1.05 |
ITQRU | Itiquira Acquisition Corp | 0 | 0.93 | 0.93 |
NNAX | New Momentum Corp | 0.42 | -0.09 | -0.07 |
SCPE | SC Health Corp | 0 | 0.97 | 0.96 |
THCA | Tuscan Holdings Corp II | 0.03 | 0.11 | 0.11 |
Low | High | |
Unlevered beta | 0.97 | 1 |
Relevered beta | 1.1 | 1.13 |
Adjusted relevered beta | 1.07 | 1.09 |
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 NML:
cost_of_equity (9.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.07) + 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.