The WACC of Rafina Innovations Inc (VICA) is 4.3%.
| Range | Selected | |
| Cost of equity | 4.10% - 14.20% | 9.15% |
| Tax rate | -% - 0.30% | 0.15% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.0% - 4.6% | 4.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.27 | 1.4 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 4.10% | 14.20% |
| Tax rate | -% | 0.30% |
| Debt/Equity ratio | 59.78 | 59.78 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.0% | 4.6% |
| Selected WACC | 4.3% | |
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 VICA:
cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.27) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.