STHI
Sprout Tiny Homes Inc
Price:  
0.01 
USD
Volume:  
570.00
United States | Household Durables
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STHI WACC - Weighted Average Cost of Capital

The WACC of Sprout Tiny Homes Inc (STHI) is 9.1%.

The Cost of Equity of Sprout Tiny Homes Inc (STHI) is 16.40%.
The Cost of Debt of Sprout Tiny Homes Inc (STHI) is 10.80%.

Range Selected
Cost of equity 12.70% - 20.10% 16.40%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 7.00% - 14.60% 10.80%
WACC 6.2% - 11.9% 9.1%
WACC

STHI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.92 2.71
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.70% 20.10%
Tax rate 26.20% 27.00%
Debt/Equity ratio 6.44 6.44
Cost of debt 7.00% 14.60%
After-tax WACC 6.2% 11.9%
Selected WACC 9.1%

STHI'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 STHI:

cost_of_equity (16.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.92) + 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.