RMO
Romeo Power Inc
Price:  
0.35 
USD
Volume:  
1,901,040
United States | Electrical Equipment

RMO WACC - Weighted Average Cost of Capital

The WACC of Romeo Power Inc (RMO) is 7.8%.

The Cost of Equity of Romeo Power Inc (RMO) is 7.85%.
The Cost of Debt of Romeo Power Inc (RMO) is 7%.

RangeSelected
Cost of equity6.4% - 9.3%7.85%
Tax rate0.1% - 5.6%2.85%
Cost of debt7.0% - 7.0%7%
WACC6.5% - 9.1%7.8%
WACC

RMO WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.560.79
Additional risk adjustments0.0%0.5%
Cost of equity6.4%9.3%
Tax rate0.1%5.6%
Debt/Equity ratio
0.050.05
Cost of debt7.0%7.0%
After-tax WACC6.5%9.1%
Selected WACC7.8%

RMO WACC - Detailed calculations of Beta

Debt/EquityUnlevered
PeersCompany NameratioBetabeta
RMORomeo Power Inc0.051.481.4
LowHigh
Unlevered beta1.41.4
Relevered beta0.340.69
Adjusted relevered beta0.560.79

RMO'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 RMO:

cost_of_equity (7.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.