The WACC of ZaZa Energy Corp (ZAZA) is 11.9%.
| Range | Selected | |
| Cost of equity | 34.90% - 45,403.00% | 22,718.95% |
| Tax rate | 22.10% - 45.90% | 34.00% |
| Cost of debt | 7.00% - 32.50% | 19.75% |
| WACC | 5.5% - 18.3% | 11.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 6.75 | 8106.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 34.90% | 45,403.00% |
| Tax rate | 22.10% | 45.90% |
| Debt/Equity ratio | 67101.74 | 67101.74 |
| Cost of debt | 7.00% | 32.50% |
| After-tax WACC | 5.5% | 18.3% |
| Selected WACC | 11.9% | |
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 ZAZA:
cost_of_equity (22,718.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (6.75) + 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.