NRK WACC - Weighted Average Cost of Capital

The WACC of Nuveen New York AMT-Free Quality Municipal Income Fund (NRK) is 8.4%.

The Cost of Equity of Nuveen New York AMT-Free Quality Municipal Income Fund (NRK) is 11.30%.

The Cost of Debt of Nuveen New York AMT-Free Quality Municipal Income Fund (NRK) is 6.55%.

	Range	Selected
Cost of equity	10.10% - 12.50%	11.30%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	4.00% - 9.10%	6.55%
WACC	6.9% - 9.9%	8.4%

WACC

NRK WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.36	1.36

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.10%	12.50%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.8	0.8
Cost of debt	4.00%	9.10%

After-tax WACC	6.9%	9.9%


Selected WACC	8.4%

NRK'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 NRK:

cost_of_equity (11.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.36) + 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.