The WACC of Averbuch Formica Center Ltd (AVER.TA) is 7.3%.
Range | Selected | |
Cost of equity | 6.70% - 8.60% | 7.65% |
Tax rate | 12.80% - 18.00% | 15.40% |
Cost of debt | 6.10% - 7.00% | 6.55% |
WACC | 6.5% - 8.2% | 7.3% |
Category | Low | High |
Long-term bond rate | 4.8% | 5.3% |
Equity market risk premium | 6.1% | 7.1% |
Adjusted beta | 0.3 | 0.38 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.70% | 8.60% |
Tax rate | 12.80% | 18.00% |
Debt/Equity ratio | 0.18 | 0.18 |
Cost of debt | 6.10% | 7.00% |
After-tax WACC | 6.5% | 8.2% |
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 AVER.TA:
cost_of_equity (7.65%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.3) + 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.