The WACC of O2I SA (ALODI.PA) is 7.4%.
| Range | Selected | |
| Cost of equity | 10.20% - 15.20% | 12.70% |
| Tax rate | 9.80% - 23.90% | 16.85% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.7% - 8.2% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 1.46 | 1.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 15.20% |
| Tax rate | 9.80% | 23.90% |
| Debt/Equity ratio | 1.63 | 1.63 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.7% | 8.2% |
| Selected WACC | 7.4% | |
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 ALODI.PA:
cost_of_equity (12.70%) = risk_free_rate (2.85%) + equity_risk_premium (5.70%) * adjusted_beta (1.46) + 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.