The WACC of Alpha Bank SA (ALPHA.AT) is 10.0%.
| Range | Selected | |
| Cost of equity | 12.70% - 18.00% | 15.35% |
| Tax rate | 19.70% - 28.20% | 23.95% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.7% - 11.3% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 1.07 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.70% | 18.00% |
| Tax rate | 19.70% | 28.20% |
| Debt/Equity ratio | 0.86 | 0.86 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.7% | 11.3% |
| Selected WACC | 10.0% | |
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 ALPHA.AT:
cost_of_equity (15.35%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (1.07) + 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.