ADIG.L WACC - Weighted Average Cost of Capital
The WACC of Aberdeen Diversified Income and Growth Trust PLC (ADIG.L) is 9.1%.
| Range | Selected | |
| Cost of equity | 11.4% - 15.6% | 13.5% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 4.9% - 7.0% | 5.95% |
| WACC | 7.6% - 10.6% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.23 | 1.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.4% | 15.6% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.9% | 7.0% |
| After-tax WACC | 7.6% | 10.6% |
| Selected WACC | 9.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ADIG.L | Aberdeen Diversified Income and Growth Trust PLC | 1.06 | 0.62 | 0.33 |
| ABD.L | Aberdeen New Dawn Investment Trust PLC | 0.12 | 0.67 | 0.61 |
| AEMC.L | Aberdeen Emerging Markets Investment Company Ltd | 0.04 | 0.78 | 0.76 |
| BRFI.L | BlackRock Frontiers Investment Trust PLC | 0 | 1.03 | 1.03 |
| HINT.L | Henderson International Income Trust PLC | 0.07 | 1.01 | 0.95 |
| JMI.L | JPmorgan Smaller Companies Investment Trust PLC | 0.12 | 1.68 | 1.53 |
| JPEI.L | Jpmorgan Elect PLC | 0.02 | 1.15 | 1.14 |
| JSGI.L | JPMorgan Japan Small Cap Growth & Income PLC | 0.1 | 0.58 | 0.54 |
| MTE.L | Montanaro European Smaller Companies Trust PLC | 0.03 | 1.22 | 1.19 |
| NCYF.L | CQS New City High Yield Fund Ltd | 0.11 | 0.79 | 0.72 |
| STS.L | Securities Trust Of Scotland PLC | 0.05 | 0.76 | 0.73 |
| Low | High | |
| Unlevered beta | 0.73 | 0.95 |
| Relevered beta | 1.34 | 1.78 |
| Adjusted relevered beta | 1.23 | 1.52 |
ADIG.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 ADIG.L:
cost_of_equity (13.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.23) + 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.