The WACC of SMG Industries Inc (SMGI) is 12.6%.
| Range | Selected | |
| Cost of equity | 176.10% - 395.30% | 285.70% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 22.60% | 14.80% |
| WACC | 6.3% - 19.0% | 12.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 37.44 | 69.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 176.10% | 395.30% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 151.87 | 151.87 |
| Cost of debt | 7.00% | 22.60% |
| After-tax WACC | 6.3% | 19.0% |
| Selected WACC | 12.6% | |
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 SMGI:
cost_of_equity (285.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (37.44) + 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.