RMCF WACC - Weighted Average Cost of Capital
The WACC of Rocky Mountain Chocolate Factory Inc (Delaware) (RMCF) is 6.5%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.6% | 6.6% |
| Tax rate | 9.1% - 18.1% | 13.6% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 5.7% - 7.4% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.37 | 0.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.6% |
| Tax rate | 9.1% | 18.1% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 5.7% | 7.4% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RMCF | Rocky Mountain Chocolate Factory Inc (Delaware) | 0.13 | 0.45 | 0.41 |
| AMNF | Armanino Foods Of Distinction Inc | 0.01 | 0.1 | 0.1 |
| ANPFF | Anpulo Food Inc | 0.84 | 0.93 | 0.53 |
| BGA.V | BioNeutra Global Corp | 5.48 | 0.38 | 0.07 |
| BSFC | Blue Star Foods Corp | 0.77 | 1.76 | 1.05 |
| DLC.V | DLC Holdings Corp | 0.91 | -0.86 | -0.48 |
| K | Kellogg Co | 0.2 | 0.03 | 0.02 |
| MMMB | MamaMancini's Holdings Inc | 0.07 | 0.42 | 0.4 |
| NUZE | NuZee Inc | 0 | -1.24 | -1.23 |
| SJM | J M Smucker Co | 0.71 | 0.08 | 0.05 |
| Low | High | |
| Unlevered beta | 0.06 | 0.22 |
| Relevered beta | 0.06 | 0.24 |
| Adjusted relevered beta | 0.37 | 0.49 |
RMCF'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 RMCF:
cost_of_equity (6.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.37) + 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.