The WACC of Rainmaker Systems Inc (VCTL) is 7.0%.
| Range | Selected | |
| Cost of equity | 892.20% - 1,920.50% | 1,406.35% |
| Tax rate | 2.00% - 2.70% | 2.35% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.9% - 9.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 193.13 | 342.08 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 892.20% | 1,920.50% |
| Tax rate | 2.00% | 2.70% |
| Debt/Equity ratio | 861.57 | 861.57 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.9% | 9.0% |
| Selected WACC | 7.0% | |
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 VCTL:
cost_of_equity (1,406.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (193.13) + 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.