SRCO WACC - Weighted Average Cost of Capital
The WACC of Sparta Commercial Services Inc (SRCO) is 5.1%.
| Range | Selected | |
| Cost of equity | 5.3% - 8.6% | 6.95% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.4% - 5.8% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.3 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.3% | 8.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.29 | 1.29 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.4% | 5.8% |
| Selected WACC | 5.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SRCO | Sparta Commercial Services Inc | 1.29 | 0.67 | 0.34 |
| AHIX | ALUF Holdings Inc | 0.04 | -1.21 | -1.18 |
| ASKH | Astika Holdings Inc | 0.31 | -0.82 | -0.67 |
| BABL | Buildablock Corp. | 0 | -0.03 | -0.03 |
| BXV.CN | Bexar Ventures Inc | 0.06 | 0.95 | 0.91 |
| GNTW | Globe Net Wireless Corp | 0 | 1.78 | 1.78 |
| ITNF | Internet Infinity Inc | 0.11 | -0.31 | -0.29 |
| MDGC | Mediag3 Inc | 0.12 | 0 | 0 |
| NUGN | NuGene International Inc | 3.75 | 1.22 | 0.33 |
| Low | High | |
| Unlevered beta | -0.02 | 0.26 |
| Relevered beta | -0.04 | 0.51 |
| Adjusted relevered beta | 0.3 | 0.67 |
SRCO'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 SRCO:
cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.3) + 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.