The WACC of Royal Olympic Cruise Lines Inc (ROCLF) is 6.1%.
| Range | Selected | |
| Cost of equity | 15,395,963.60% - 25,945,839.20% | 20,670,901.40% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 7.50% | 7.25% |
| WACC | 5.7% - 6.4% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3.34694778e+06 | 4.63318471e+06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15,395,963.60% | 25,945,839.20% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 2.690521429e+07 | 2.690521429e+07 |
| Cost of debt | 7.00% | 7.50% |
| After-tax WACC | 5.7% | 6.4% |
| Selected WACC | 6.1% | |
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 ROCLF:
cost_of_equity (20,670,901.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3.34694778e+06) + 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.