The WACC of Towerstream Corp (TWER) is 7.9%.
| Range | Selected | |
| Cost of equity | 573.70% - 3,458.50% | 2,016.10% |
| Tax rate | 0.50% - 0.70% | 0.60% |
| Cost of debt | 7.00% - 8.20% | 7.60% |
| WACC | 7.0% - 8.7% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 123.87 | 616.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 573.70% | 3,458.50% |
| Tax rate | 0.50% | 0.70% |
| Debt/Equity ratio | 6724.28 | 6724.28 |
| Cost of debt | 7.00% | 8.20% |
| After-tax WACC | 7.0% | 8.7% |
| Selected WACC | 7.9% | |
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 TWER:
cost_of_equity (2,016.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (123.87) + 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.