SOTK
Sono-Tek Corp
Price:  
3.85 
USD
Volume:  
6,534.00
United States | Electronic Equipment, Instruments & Components
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SOTK WACC - Weighted Average Cost of Capital

The WACC of Sono-Tek Corp (SOTK) is 8.6%.

The Cost of Equity of Sono-Tek Corp (SOTK) is 12.95%.
The Cost of Debt of Sono-Tek Corp (SOTK) is 5.00%.

Range Selected
Cost of equity 11.30% - 14.60% 12.95%
Tax rate 15.20% - 17.20% 16.20%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.8% - 9.4% 8.6%
WACC

SOTK WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.62 1.74
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.30% 14.60%
Tax rate 15.20% 17.20%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 7.8% 9.4%
Selected WACC 8.6%

SOTK'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 SOTK:

cost_of_equity (12.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.62) + 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.