The WACC of Advini SA (ADVI.PA) is 5.2%.
| Range | Selected | |
| Cost of equity | 5.70% - 7.70% | 6.70% |
| Tax rate | 16.30% - 19.10% | 17.70% |
| Cost of debt | 4.00% - 7.40% | 5.70% |
| WACC | 4.0% - 6.5% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 6.2% | 7.2% |
| Adjusted beta | 0.41 | 0.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 7.70% |
| Tax rate | 16.30% | 19.10% |
| Debt/Equity ratio | 2.55 | 2.55 |
| Cost of debt | 4.00% | 7.40% |
| After-tax WACC | 4.0% | 6.5% |
| Selected WACC | 5.2% | |
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 ADVI.PA:
cost_of_equity (6.70%) = risk_free_rate (3.35%) + equity_risk_premium (6.70%) * adjusted_beta (0.41) + 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.