The WACC of Wow Unlimited Media Inc (WOW.V) is 7.5%.
| Range | Selected | |
| Cost of equity | 6.50% - 10.90% | 8.70% |
| Tax rate | 1.90% - 7.80% | 4.85% |
| Cost of debt | 4.70% - 8.00% | 6.35% |
| WACC | 5.6% - 9.3% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.7 | 1.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.50% | 10.90% |
| Tax rate | 1.90% | 7.80% |
| Debt/Equity ratio | 0.82 | 0.82 |
| Cost of debt | 4.70% | 8.00% |
| After-tax WACC | 5.6% | 9.3% |
| Selected WACC | 7.5% | |
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 WOW.V:
cost_of_equity (8.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.20%) * adjusted_beta (0.7) + 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.