SMIT WACC - Weighted Average Cost of Capital
The WACC of Schmitt Industries Inc (SMIT) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.4% - 12.1% | 8.75% |
| Tax rate | 0.6% - 2.2% | 1.4% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 6.9% - 7.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.54 | 0.58 |
| Additional risk adjustments | 4.0% | 4.5% |
| Cost of equity | 5.4% | 12.1% |
| Tax rate | 0.6% | 2.2% |
| Debt/Equity ratio | 35.7 | 35.7 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 6.9% | 7.0% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SMIT | Schmitt Industries Inc | 35.7 | 0.89 | 0.02 |
| CRGS | CurAegis Technologies Inc | 1843.54 | 1.06 | 0 |
| DPLS | Darkpulse Inc | 0.49 | 0.05 | 0.04 |
| IMTE | Integrated Media Technology Ltd | 1.97 | -0.86 | -0.29 |
| LCTC | Lifeloc Technologies Inc | 0.21 | 0.16 | 0.13 |
| MACE | Mace Security International Inc | 1.74 | -0.24 | -0.09 |
| TEST.V | FluroTech Ltd | 0.27 | -0.59 | -0.47 |
| TLA.V | Titan Logix Corp | 0.04 | 0.63 | 0.61 |
| VSYS | Viscount Systems Inc | 2919.33 | -1.21 | 0 |
| Low | High | |
| Unlevered beta | 0 | 0.02 |
| Relevered beta | -1.3 | 0.37 |
| Adjusted relevered beta | -0.54 | 0.58 |
SMIT'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 SMIT:
cost_of_equity (8.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.54) + risk_adjustments (4.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.