The WACC of RumbleOn Inc (RMBL) is 15.0%.
| Range | Selected | |
| Cost of equity | 12.00% - 23.90% | 17.95% |
| Tax rate | 13.10% - 28.30% | 20.70% |
| Cost of debt | 13.60% - 23.90% | 18.75% |
| WACC | 11.9% - 18.1% | 15.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.77 | 3.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 23.90% |
| Tax rate | 13.10% | 28.30% |
| Debt/Equity ratio | 5.69 | 5.69 |
| Cost of debt | 13.60% | 23.90% |
| After-tax WACC | 11.9% | 18.1% |
| Selected WACC | 15.0% | |
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 RMBL:
cost_of_equity (17.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.77) + 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.