The WACC of ABG Sundal Collier Holding ASA (ABG.OL) is 7.5%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.70% | 7.20% |
| Tax rate | 25.20% - 25.50% | 25.35% |
| Cost of debt | 7.00% - 18.00% | 12.50% |
| WACC | 5.7% - 9.3% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.47 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.70% |
| Tax rate | 25.20% | 25.50% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 7.00% | 18.00% |
| After-tax WACC | 5.7% | 9.3% |
| Selected WACC | 7.5% | |
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 ABG.OL:
cost_of_equity (7.20%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.47) + 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.