The WACC of Altia Consultores SA (ALC.MC) is 45.2%.
| Range | Selected | |
| Cost of equity | 5.70% - 7.80% | 6.75% |
| Tax rate | 21.70% - 23.40% | 22.55% |
| Cost of debt | 4.00% - 1,601.70% | 802.85% |
| WACC | 5.5% - 84.9% | 45.2% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.35 | 0.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 7.80% |
| Tax rate | 21.70% | 23.40% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 4.00% | 1,601.70% |
| After-tax WACC | 5.5% | 84.9% |
| Selected WACC | 45.2% | |
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 ALC.MC:
cost_of_equity (6.75%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (0.35) + 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.