The WACC of Teligent Inc (NEW JERSEY) (TLGT) is 5.5%.
| Range | Selected | |
| Cost of equity | 4.60% - 7.30% | 5.95% |
| Tax rate | 1.10% - 2.00% | 1.55% |
| Cost of debt | 4.10% - 7.00% | 5.55% |
| WACC | 4.1% - 6.9% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.33 | 0.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.60% | 7.30% |
| Tax rate | 1.10% | 2.00% |
| Debt/Equity ratio | 10.08 | 10.08 |
| Cost of debt | 4.10% | 7.00% |
| After-tax WACC | 4.1% | 6.9% |
| Selected WACC | 5.5% | |
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 TLGT:
cost_of_equity (5.95%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.33) + 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.