AREC.L WACC - Weighted Average Cost of Capital

The WACC of Arecor Therapeutics PLC (AREC.L) is 11.5%.

The Cost of Equity of Arecor Therapeutics PLC (AREC.L) is 11.50%.

The Cost of Debt of Arecor Therapeutics PLC (AREC.L) is 6.75%.

	Range	Selected
Cost of equity	10.30% - 12.70%	11.50%
Tax rate	8.30% - 11.60%	9.95%
Cost of debt	6.50% - 7.00%	6.75%
WACC	10.3% - 12.7%	11.5%

WACC

AREC.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.05	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	12.70%

Tax rate	8.30%	11.60%
Debt/Equity ratio	0.01	0.01
Cost of debt	6.50%	7.00%

After-tax WACC	10.3%	12.7%


Selected WACC	11.5%

AREC.L's CAPM model and how its cost of Equity is calculated

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 AREC.L:

cost_of_equity (11.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.05) + 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.