PSWW
Principal Solar Inc
Price:  
0.00 
USD
Volume:  
37,937,380.00
United States | Independent Power and Renewable Electricity Producers
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PSWW WACC - Weighted Average Cost of Capital

The WACC of Principal Solar Inc (PSWW) is 7.0%.

The Cost of Equity of Principal Solar Inc (PSWW) is 7.35%.
The Cost of Debt of Principal Solar Inc (PSWW) is 7.00%.

Range Selected
Cost of equity 5.70% - 9.00% 7.35%
Tax rate -% - 0.10% 0.05%
Cost of debt 7.00% - 7.00% 7.00%
WACC 6.9% - 7.1% 7.0%
WACC

PSWW WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.4 0.74
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.70% 9.00%
Tax rate -% 0.10%
Debt/Equity ratio 16.77 16.77
Cost of debt 7.00% 7.00%
After-tax WACC 6.9% 7.1%
Selected WACC 7.0%

PSWW'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 PSWW:

cost_of_equity (7.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.4) + 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.