TYG WACC - Weighted Average Cost of Capital

The WACC of Tortoise Energy Infrastructure Corp (TYG) is 9.1%.

The Cost of Equity of Tortoise Energy Infrastructure Corp (TYG) is 10.30%.

The Cost of Debt of Tortoise Energy Infrastructure Corp (TYG) is 5.50%.

	Range	Selected
Cost of equity	9.20% - 11.40%	10.30%
Tax rate	9.60% - 12.80%	11.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.0% - 10.3%	9.1%

WACC

TYG WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.15	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	11.40%

Tax rate	9.60%	12.80%
Debt/Equity ratio	0.28	0.28
Cost of debt	4.00%	7.00%

After-tax WACC	8.0%	10.3%


Selected WACC	9.1%

TYG'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 TYG:

cost_of_equity (10.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.15) + 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.