AHT.L WACC - Weighted Average Cost of Capital

The WACC of Ashtead Group PLC (AHT.L) is 8.3%.

The Cost of Equity of Ashtead Group PLC (AHT.L) is 11.20%.

The Cost of Debt of Ashtead Group PLC (AHT.L) is 4.85%.

	Range	Selected
Cost of equity	8.60% - 13.80%	11.20%
Tax rate	24.90% - 25.00%	24.95%
Cost of debt	4.50% - 5.20%	4.85%
WACC	6.6% - 10.1%	8.3%

WACC

AHT.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.78	1.27

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	13.80%

Tax rate	24.90%	25.00%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.50%	5.20%

After-tax WACC	6.6%	10.1%


Selected WACC	8.3%

AHT.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 AHT.L:

cost_of_equity (11.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.