The WACC of Towerstream Corp (TWER) is 7.6%.
| Range | Selected | |
| Cost of equity | 5.30% - 472.70% | 239.00% |
| Tax rate | 0.50% - 0.70% | 0.60% |
| Cost of debt | 7.00% - 8.20% | 7.60% |
| WACC | 7.0% - 8.2% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -100.99 | 0.33 |
| Additional risk adjustments | 466.0% | 466.5% |
| Cost of equity | 5.30% | 472.70% |
| Tax rate | 0.50% | 0.70% |
| Debt/Equity ratio | 9986.55 | 9986.55 |
| Cost of debt | 7.00% | 8.20% |
| After-tax WACC | 7.0% | 8.2% |
| Selected WACC | 7.6% | |
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 (239.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-100.99) + risk_adjustments (466.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.