The WACC of Nam Tai Property Inc (NTP) is 72.1%.
Range | Selected | |
Cost of equity | 7.6% - 10.0% | 8.8% |
Tax rate | 10.7% - 16.6% | 13.65% |
Cost of debt | 4.9% - 372.4% | 188.65% |
WACC | 6.2% - 138.0% | 72.1% |
Category | Low | High |
Long-term bond rate | 4.2% | 4.7% |
Equity market risk premium | 5.0% | 6.0% |
Adjusted beta | 0.68 | 0.8 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.6% | 10.0% |
Tax rate | 10.7% | 16.6% |
Debt/Equity ratio | 0.74 | 0.74 |
Cost of debt | 4.9% | 372.4% |
After-tax WACC | 6.2% | 138.0% |
Selected WACC | 72.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
NTP | Nam Tai Property Inc | 0.74 | 0.91 | 0.55 |
FRPH | FRP Holdings Inc | 0.35 | 0.42 | 0.32 |
INDT | Indus Realty Trust Inc | 0.25 | 0.46 | 0.38 |
KDSX.V | Kadestone Capital Corp | 0.33 | 1.17 | 0.91 |
LMRK | Landmark Infrastructure Partners LP | 1.18 | 1 | 0.5 |
MEQ.TO | Mainstreet Equity Corp | 0.93 | 0.4 | 0.22 |
TCI | Transcontinental Realty Investors Inc | 0.63 | 0.43 | 0.28 |
VCOM.V | Vivere Communities Inc | 2.31 | 1.06 | 0.35 |
YAK.V | Mongolia Growth Group Ltd | 0.87 | 0.85 | 0.48 |
ZDPY | Zoned Properties Inc | 1.71 | 0.47 | 0.19 |
Low | High | |
Unlevered beta | 0.34 | 0.42 |
Relevered beta | 0.52 | 0.7 |
Adjusted relevered beta | 0.68 | 0.8 |
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 NTP:
cost_of_equity (8.80%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.68) + 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.