The WACC of Arundel AG (ARON.SW) is 6.9%.
| Range | Selected | |
| Cost of equity | 3.50% - 10.60% | 7.05% |
| Tax rate | 13.20% - 18.90% | 16.05% |
| Cost of debt | 4.00% - 12.80% | 8.40% |
| WACC | 3.5% - 10.3% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.11 | 1.09 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 3.50% | 10.60% |
| Tax rate | 13.20% | 18.90% |
| Debt/Equity ratio | 90.7 | 90.7 |
| Cost of debt | 4.00% | 12.80% |
| After-tax WACC | 3.5% | 10.3% |
| Selected WACC | 6.9% | |
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 ARON.SW:
cost_of_equity (7.05%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.11) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.