SMEV WACC - Weighted Average Cost of Capital
The WACC of Simulated Environment Concepts Inc (SMEV) is 5.2%.
| Range | Selected | |
| Cost of equity | 5.4% - 6.7% | 6.05% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.3% - 6.0% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.33 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 6.7% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.78 | 0.78 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.3% | 6.0% |
| Selected WACC | 5.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SMEV | Simulated Environment Concepts Inc | 0.78 | -1.4 | -0.89 |
| HWKE | Hawkeye Systems Inc | 1.66 | -0.16 | -0.07 |
| IOMT | Isomet Corp | 0.17 | 0 | 0 |
| RCHN | Rouchon Industries Inc | 0.31 | 0.13 | 0.1 |
| Low | High | |
| Unlevered beta | -0.06 | -0.01 |
| Relevered beta | 0 | 0 |
| Adjusted relevered beta | 0.33 | 0.33 |
SMEV'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 SMEV:
cost_of_equity (6.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.33) + 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.