UFCS
United Fire Group Inc
Price:  
28.63 
USD
Volume:  
89,321.00
United States | Insurance
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UFCS WACC - Weighted Average Cost of Capital

The WACC of United Fire Group Inc (UFCS) is 7.0%.

The Cost of Equity of United Fire Group Inc (UFCS) is 7.45%.
The Cost of Debt of United Fire Group Inc (UFCS) is 5.00%.

Range Selected
Cost of equity 6.60% - 8.30% 7.45%
Tax rate 21.40% - 23.40% 22.40%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.2% - 7.7% 7.0%
WACC

UFCS WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.59 0.62
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 8.30%
Tax rate 21.40% 23.40%
Debt/Equity ratio 0.16 0.16
Cost of debt 5.00% 5.00%
After-tax WACC 6.2% 7.7%
Selected WACC 7.0%

UFCS'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 UFCS:

cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + 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.