ABF.L
Associated British Foods PLC
Price:  
2,222.00 
GBP
Volume:  
686,073.00
United Kingdom | Food Products
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ABF.L WACC - Weighted Average Cost of Capital

The WACC of Associated British Foods PLC (ABF.L) is 7.0%.

The Cost of Equity of Associated British Foods PLC (ABF.L) is 7.95%.
The Cost of Debt of Associated British Foods PLC (ABF.L) is 4.35%.

Range Selected
Cost of equity 7.10% - 8.80% 7.95%
Tax rate 27.90% - 31.70% 29.80%
Cost of debt 4.00% - 4.70% 4.35%
WACC 6.3% - 7.8% 7.0%
WACC

ABF.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.52 0.55
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.10% 8.80%
Tax rate 27.90% 31.70%
Debt/Equity ratio 0.24 0.24
Cost of debt 4.00% 4.70%
After-tax WACC 6.3% 7.8%
Selected WACC 7.0%

ABF.L'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 ABF.L:

cost_of_equity (7.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.52) + 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.