The WACC of Aspo Plc (ASPO.HE) is 7.3%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.30% | 9.65% |
| Tax rate | 8.90% - 12.60% | 10.75% |
| Cost of debt | 4.00% - 8.00% | 6.00% |
| WACC | 5.6% - 9.0% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 0.92 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.30% |
| Tax rate | 8.90% | 12.60% |
| Debt/Equity ratio | 1.19 | 1.19 |
| Cost of debt | 4.00% | 8.00% |
| After-tax WACC | 5.6% | 9.0% |
| Selected WACC | 7.3% | |
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 ASPO.HE:
cost_of_equity (9.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.92) + 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.