542724.BO WACC - Weighted Average Cost of Capital

The WACC of Earum Pharmaceuticals Ltd (542724.BO) is 11.2%.

The Cost of Equity of Earum Pharmaceuticals Ltd (542724.BO) is 15.35%.

The Cost of Debt of Earum Pharmaceuticals Ltd (542724.BO) is 9.85%.

	Range	Selected
Cost of equity	13.90% - 16.80%	15.35%
Tax rate	27.00% - 27.80%	27.40%
Cost of debt	4.30% - 15.40%	9.85%
WACC	8.5% - 14.0%	11.2%

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	0.85	0.96

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.90%	16.80%

Tax rate	27.00%	27.80%
Debt/Equity ratio	1	1
Cost of debt	4.30%	15.40%

After-tax WACC	8.5%	14.0%


Selected WACC	11.2%

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 (15.35%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.85) + 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.