The WACC of Anywhere Real Estate Inc (HOUS) is 12.4%.
| Range | Selected | |
| Cost of equity | 18.40% - 25.50% | 21.95% |
| Tax rate | 15.50% - 19.00% | 17.25% |
| Cost of debt | 5.60% - 20.90% | 13.25% |
| WACC | 6.7% - 18.1% | 12.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3.15 | 3.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.40% | 25.50% |
| Tax rate | 15.50% | 19.00% |
| Debt/Equity ratio | 5.87 | 5.87 |
| Cost of debt | 5.60% | 20.90% |
| After-tax WACC | 6.7% | 18.1% |
| Selected WACC | 12.4% | |
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 HOUS:
cost_of_equity (21.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3.15) + 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.