TRC WACC - Weighted Average Cost of Capital
The WACC of Tejon Ranch Co (TRC) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.6% - 7.3% | 6.45% |
| Tax rate | 37.7% - 41.6% | 39.65% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.3% - 6.7% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.37 | 0.43 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.6% | 7.3% |
| Tax rate | 37.7% | 41.6% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.3% | 6.7% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TRC | Tejon Ranch Co | 0.15 | 0.53 | 0.49 |
| DC.A.TO | Dundee Corp | 0.07 | 1.26 | 1.21 |
| FHRT | First Hartford Corp | 4.75 | 0.79 | 0.21 |
| FPH | Five Point Holdings LLC | 1.01 | 0.68 | 0.43 |
| GDC.TO | Genesis Land Development Corp | 0.75 | 0.12 | 0.08 |
| GUF.V | Gulf & Pacific Equities Corp | 2.59 | 0.04 | 0.01 |
| HCGI | Huntwicke Capital Group Inc | 0.03 | -0.53 | -0.52 |
| IEI.V | Imperial Equities Inc | 3.39 | -0.11 | -0.04 |
| MPC.TO | Madison Pacific Properties Inc | 1.08 | 0.15 | 0.09 |
| PLAN.SW | Plazza AG | 0.37 | 0.03 | 0.03 |
| Low | High | |
| Unlevered beta | 0.06 | 0.14 |
| Relevered beta | 0.06 | 0.15 |
| Adjusted relevered beta | 0.37 | 0.43 |
TRC'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 TRC:
cost_of_equity (6.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.37) + 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.