The WACC of Alfen NV (ALFEN.AS) is 7.8%.
| Range | Selected | |
| Cost of equity | 7.10% - 9.60% | 8.35% |
| Tax rate | 21.90% - 23.30% | 22.60% |
| Cost of debt | 6.40% - 7.80% | 7.10% |
| WACC | 6.7% - 8.9% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.89 | 1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 9.60% |
| Tax rate | 21.90% | 23.30% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 6.40% | 7.80% |
| After-tax WACC | 6.7% | 8.9% |
| Selected WACC | 7.8% | |
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 ALFEN.AS:
cost_of_equity (8.35%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (0.89) + 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.