The WACC of Arlandastad Group AB (publ) (AGROUP.ST) is 8.7%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.40% | 6.25% |
| Tax rate | 14.60% - 19.30% | 16.95% |
| Cost of debt | 14.30% - 14.30% | 14.30% |
| WACC | 8.2% - 9.2% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.42 | 0.55 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.10% | 7.40% |
| Tax rate | 14.60% | 19.30% |
| Debt/Equity ratio | 0.77 | 0.77 |
| Cost of debt | 14.30% | 14.30% |
| After-tax WACC | 8.2% | 9.2% |
| Selected WACC | 8.7% | |
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 AGROUP.ST:
cost_of_equity (6.25%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (0.42) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.