The WACC of Scheid Vineyards Inc (SVIN) is 5.7%.
| Range | Selected | |
| Cost of equity | 9.50% - 12.60% | 11.05% |
| Tax rate | 34.30% - 39.60% | 36.95% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.6% - 6.7% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.48 | 1.61 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 12.60% |
| Tax rate | 34.30% | 39.60% |
| Debt/Equity ratio | 2.42 | 2.42 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.6% | 6.7% |
| Selected WACC | 5.7% | |
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 SVIN:
cost_of_equity (11.05%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.48) + 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.