The WACC of Inotiv Inc (NOTV) is 8.0%.
| Range | Selected | |
| Cost of equity | 15.00% - 18.80% | 16.90% |
| Tax rate | 11.10% - 16.00% | 13.55% |
| Cost of debt | 7.00% - 8.50% | 7.75% |
| WACC | 7.4% - 8.7% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.41 | 2.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.00% | 18.80% |
| Tax rate | 11.10% | 16.00% |
| Debt/Equity ratio | 6.52 | 6.52 |
| Cost of debt | 7.00% | 8.50% |
| After-tax WACC | 7.4% | 8.7% |
| Selected WACC | 8.0% | |
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 Inotiv:
cost_of_equity (16.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.41) + 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.