The WACC of Patient Portal Technologies Inc (PPRG) is 15.2%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.70% | 6.95% |
| Tax rate | 0.10% - 0.30% | 0.20% |
| Cost of debt | 7.00% - 23.50% | 15.25% |
| WACC | 7.0% - 23.4% | 15.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.15 | 0.33 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 5.20% | 8.70% |
| Tax rate | 0.10% | 0.30% |
| Debt/Equity ratio | 2471.85 | 2471.85 |
| Cost of debt | 7.00% | 23.50% |
| After-tax WACC | 7.0% | 23.4% |
| Selected WACC | 15.2% | |
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 PPRG:
cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.15) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.