The WACC of Monitronics International Inc (SCTY) is 12.0%.
| Range | Selected | |
| Cost of equity | 3.80% - 312.40% | 158.10% |
| Tax rate | 0.90% - 1.20% | 1.05% |
| Cost of debt | 4.00% - 20.20% | 12.10% |
| WACC | 4.0% - 20.0% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | -61.48 | 0.04 |
| Additional risk adjustments | 307.0% | 307.5% |
| Cost of equity | 3.80% | 312.40% |
| Tax rate | 0.90% | 1.20% |
| Debt/Equity ratio | 8704.17 | 8704.17 |
| Cost of debt | 4.00% | 20.20% |
| After-tax WACC | 4.0% | 20.0% |
| Selected WACC | 12.0% | |
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 SCTY:
cost_of_equity (158.10%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (-61.48) + risk_adjustments (307.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.