The WACC of Cesar SA (ALCES.PA) is 3.8%.
| Range | Selected | |
| Cost of equity | 3.50% - 12.80% | 8.15% |
| Tax rate | 25.90% - 27.10% | 26.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 3.7% - 4.0% | 3.8% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | -0.44 | 0.85 |
| Additional risk adjustments | 3.0% | 3.5% |
| Cost of equity | 3.50% | 12.80% |
| Tax rate | 25.90% | 27.10% |
| Debt/Equity ratio | 26.3 | 26.3 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 3.7% | 4.0% |
| Selected WACC | 3.8% | |
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 ALCES.PA:
cost_of_equity (8.15%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (-0.44) + risk_adjustments (3.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.