The WACC of Alba Mineral Resources PLC (ALBA.L) is 5.6%.
| Range | Selected | |
| Cost of equity | 3.50% - 10.60% | 7.05% |
| Tax rate | 19.00% - 19.00% | 19.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 3.8% - 7.3% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | -0.17 | 0.74 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 3.50% | 10.60% |
| Tax rate | 19.00% | 19.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 3.8% | 7.3% |
| Selected WACC | 5.6% | |
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 ALBA.L:
cost_of_equity (7.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (-0.17) + 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.