The WACC of Traton SE (8TRA.DE) is 6.8%.
| Range | Selected | |
| Cost of equity | 10.20% - 14.40% | 12.30% |
| Tax rate | 26.00% - 27.10% | 26.55% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.0% - 7.5% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.45 | 1.74 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 14.40% |
| Tax rate | 26.00% | 27.10% |
| Debt/Equity ratio | 1.8 | 1.8 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.0% | 7.5% |
| Selected WACC | 6.8% | |
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 8TRA.DE:
cost_of_equity (12.30%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (1.45) + 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.