The WACC of NXT Nutritionals Holdings Inc (NXTH) is 18.6%.
| Range | Selected | |
| Cost of equity | 5.40% - 41,242.20% | 20,623.80% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 25.10% - 25.10% | 25.10% |
| WACC | 18.5% - 18.6% | 18.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -8328.59 | 522.2 |
| Additional risk adjustments | 38313.0% | 38313.5% |
| Cost of equity | 5.40% | 41,242.20% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 135715.48 | 135715.48 |
| Cost of debt | 25.10% | 25.10% |
| After-tax WACC | 18.5% | 18.6% |
| Selected WACC | 18.6% | |
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 NXTH:
cost_of_equity (20,623.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-8328.59) + risk_adjustments (38,313.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.