542724.BO WACC - Weighted Average Cost of Capital

The WACC of Earum Pharmaceuticals Ltd (542724.BO) is 11.8%.

The Cost of Equity of Earum Pharmaceuticals Ltd (542724.BO) is 24.70%.

The Cost of Debt of Earum Pharmaceuticals Ltd (542724.BO) is 7.50%.

	Range	Selected
Cost of equity	19.90% - 29.50%	24.70%
Tax rate	26.70% - 27.80%	27.25%
Cost of debt	7.50% - 7.50%	7.50%
WACC	10.2% - 13.3%	11.8%

WACC

542724.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	1.57	2.33

Additional risk adjustments	0.0%	0.5%
Cost of equity	19.90%	29.50%

Tax rate	26.70%	27.80%
Debt/Equity ratio	2.03	2.03
Cost of debt	7.50%	7.50%

After-tax WACC	10.2%	13.3%


Selected WACC	11.8%

542724.BO's CAPM model and how its cost of Equity is calculated

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 542724.BO:

cost_of_equity (24.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.57) + 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.