PFLT
PennantPark Floating Rate Capital Ltd
Price:  
10.63 
USD
Volume:  
779,678
United States | Capital Markets

PFLT WACC - Weighted Average Cost of Capital

The WACC of PennantPark Floating Rate Capital Ltd (PFLT) is 8.5%.

The Cost of Equity of PennantPark Floating Rate Capital Ltd (PFLT) is 8.15%.
The Cost of Debt of PennantPark Floating Rate Capital Ltd (PFLT) is 9.05%.

RangeSelected
Cost of equity7.0% - 9.3%8.15%
Tax rate1.8% - 2.3%2.05%
Cost of debt5.7% - 12.4%9.05%
WACC6.2% - 10.8%8.5%
WACC

PFLT WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.690.79
Additional risk adjustments0.0%0.5%
Cost of equity7.0%9.3%
Tax rate1.8%2.3%
Debt/Equity ratio
1.11.1
Cost of debt5.7%12.4%
After-tax WACC6.2%10.8%
Selected WACC8.5%

PFLT'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 PFLT:

cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * 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.