The WACC of Venus Concept Inc (VERO) is 4.4%.
| Range | Selected | |
| Cost of equity | 4.60% - 13.80% | 9.20% |
| Tax rate | 1.40% - 1.50% | 1.45% |
| Cost of debt | 4.30% - 4.50% | 4.40% |
| WACC | 4.3% - 4.6% | 4.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.61 | 0.98 |
| Additional risk adjustments | 3.5% | 4.0% |
| Cost of equity | 4.60% | 13.80% |
| Tax rate | 1.40% | 1.50% |
| Debt/Equity ratio | 68.46 | 68.46 |
| Cost of debt | 4.30% | 4.50% |
| After-tax WACC | 4.3% | 4.6% |
| Selected WACC | 4.4% | |
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 VERO:
cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.61) + risk_adjustments (3.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.