The WACC of Ultrapetrol (Bahamas) Ltd (ULTRF) is 5.5%.
| Range | Selected | |
| Cost of equity | 3.00% - 3,996.50% | 1,999.75% |
| Tax rate | 9.90% - 12.50% | 11.20% |
| Cost of debt | 5.40% - 7.00% | 6.20% |
| WACC | 4.8% - 6.2% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -943.22 | -61.86 |
| Additional risk adjustments | 4338.0% | 4338.5% |
| Cost of equity | 3.00% | 3,996.50% |
| Tax rate | 9.90% | 12.50% |
| Debt/Equity ratio | 32169.47 | 32169.47 |
| Cost of debt | 5.40% | 7.00% |
| After-tax WACC | 4.8% | 6.2% |
| Selected WACC | 5.5% | |
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 ULTRF:
cost_of_equity (1,999.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-943.22) + risk_adjustments (4,338.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.