The WACC of Hiolle Industries SA (ALHIO.PA) is 6.7%.
| Range | Selected | |
| Cost of equity | 6.90% - 9.60% | 8.25% |
| Tax rate | 25.40% - 32.10% | 28.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.9% - 7.6% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.83 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 9.60% |
| Tax rate | 25.40% | 32.10% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.9% | 7.6% |
| Selected WACC | 6.7% | |
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 ALHIO.PA:
cost_of_equity (8.25%) = risk_free_rate (2.85%) + equity_risk_premium (5.70%) * adjusted_beta (0.83) + 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.