The WACC of Sesen Bio Inc (SESN) is 8.2%.
| Range | Selected | |
| Cost of equity | 10.10% - 15.10% | 12.60% |
| Tax rate | 14.40% - 32.30% | 23.35% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.2% - 9.3% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.19 | 1.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.10% | 15.10% |
| Tax rate | 14.40% | 32.30% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.2% | 9.3% |
| Selected WACC | 8.2% | |
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 SESN:
cost_of_equity (12.60%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.19) + 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.