The WACC of Reworld Media SA (ALREW.PA) is 7.2%.
| Range | Selected | |
| Cost of equity | 9.50% - 17.10% | 13.30% |
| Tax rate | 16.90% - 18.70% | 17.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.9% - 8.4% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.12 | 1.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 17.10% |
| Tax rate | 16.90% | 18.70% |
| Debt/Equity ratio | 1.98 | 1.98 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.9% | 8.4% |
| Selected WACC | 7.2% | |
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 ALREW.PA:
cost_of_equity (13.30%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (1.12) + 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.