The WACC of Aferian PLC (AFRN.L) is 15.2%.
| Range | Selected | |
| Cost of equity | 34.80% - 91.80% | 63.30% |
| Tax rate | 3.20% - 7.10% | 5.15% |
| Cost of debt | 7.00% - 16.90% | 11.95% |
| WACC | 8.9% - 21.5% | 15.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 5.15 | 12.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 34.80% | 91.80% |
| Tax rate | 3.20% | 7.10% |
| Debt/Equity ratio | 12.18 | 12.18 |
| Cost of debt | 7.00% | 16.90% |
| After-tax WACC | 8.9% | 21.5% |
| Selected WACC | 15.2% | |
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 AFRN.L:
cost_of_equity (63.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (5.15) + 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.