Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	4.2%	5.2%
Adjusted beta	0.69	0.79

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.1%	8.3%

Tax rate	27.0%	27.0%
Debt/Equity ratio	0.78	0.78
Cost of debt	4.0%	4.5%

After-tax WACC	4.7%	6.1%


Selected WACC	5.4%

PCI WACC - Detailed calculations of Beta

		Debt/Equity		Unlevered
Peers	Company Name	ratio	Beta	beta

PCI	Pimco Dynamic Credit and Mortgage Income Fund	0.78	0.77	0.49
BSTZ	Blackrock Science and Technology Trust II	0	3.55	3.54
DNP	DNP Select Income Fund Inc	0.31	3.55	2.89
DSL	DoubleLine Income Solutions Fund	0.27	3.55	2.95
NAC	Nuveen California Quality Municipal Income Fund	0.77	3.55	2.27
NAD	Nuveen Quality Municipal Income Fund	0.03	3.55	3.47
NEA	Nuveen Amt-Free Quality Municipal Income Fund	0.02	3.55	3.48
NVG	Nuveen AMT-Free Municipal Credit Income Fund	0.76	3.55	2.28
NZF	Nuveen Municipal Credit Income Fund	0.16	3.55	3.17
PDI	PIMCO Dynamic Income Fund	0.53	3.55	2.55

	Low	High

Unlevered beta	2.76	3.04
Relevered beta	0.54	0.69
Adjusted relevered beta	0.69	0.79

PCI'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 PCI:

cost_of_equity (7.20%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.69) + 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.