RAVE
Rave Restaurant Group Inc
Price:  
2.39 
USD
Volume:  
5,237.00
United States | Hotels, Restaurants & Leisure
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RAVE WACC - Weighted Average Cost of Capital

The WACC of Rave Restaurant Group Inc (RAVE) is 6.4%.

The Cost of Equity of Rave Restaurant Group Inc (RAVE) is 9.20%.
The Cost of Debt of Rave Restaurant Group Inc (RAVE) is 5.00%.

Range Selected
Cost of equity 7.40% - 11.00% 9.20%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.6% - 7.3% 6.4%
WACC

RAVE WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.77 1.09
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 11.00%
Tax rate 26.20% 27.00%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 5.6% 7.3%
Selected WACC 6.4%

RAVE'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 RAVE:

cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.