The WACC of Cabasse SA (ALCAB.PA) is 5.7%.
| Range | Selected | |
| Cost of equity | 56.90% - 88.70% | 72.80% |
| Tax rate | 15.70% - 21.90% | 18.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.5% - 5.9% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 9.26 | 12.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 56.90% | 88.70% |
| Tax rate | 15.70% | 21.90% |
| Debt/Equity ratio | 41.41 | 41.41 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.5% | 5.9% |
| Selected WACC | 5.7% | |
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 ALCAB.PA:
cost_of_equity (72.80%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (9.26) + 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.