The WACC of Avantium NV (AVTX.AS) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.10% - 8.60% | 6.85% |
| Tax rate | 25.00% - 25.30% | 25.15% |
| Cost of debt | 7.00% - 12.00% | 9.50% |
| WACC | 5.2% - 8.8% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.4 | 0.74 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.10% | 8.60% |
| Tax rate | 25.00% | 25.30% |
| Debt/Equity ratio | 1.2 | 1.2 |
| Cost of debt | 7.00% | 12.00% |
| After-tax WACC | 5.2% | 8.8% |
| Selected WACC | 7.0% | |
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 AVTX.AS:
cost_of_equity (6.85%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (0.4) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.