AVV.L
AVEVA Group PLC
Price:  
3,219 
GBP
Volume:  
9,661,390
United Kingdom | Software

AVV.L WACC - Weighted Average Cost of Capital

The WACC of AVEVA Group PLC (AVV.L) is 8.1%.

The Cost of Equity of AVEVA Group PLC (AVV.L) is 8.35%.
The Cost of Debt of AVEVA Group PLC (AVV.L) is 7.1%.

RangeSelected
Cost of equity6.5% - 10.2%8.35%
Tax rate26.1% - 27.5%26.8%
Cost of debt7.1% - 7.1%7.1%
WACC6.4% - 9.8%8.1%
WACC

AVV.L WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium6.0%7.0%
Adjusted beta0.420.75
Additional risk adjustments0.0%0.5%
Cost of equity6.5%10.2%
Tax rate26.1%27.5%
Debt/Equity ratio
0.080.08
Cost of debt7.1%7.1%
After-tax WACC6.4%9.8%
Selected WACC8.1%

AVV.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 AVV.L:

cost_of_equity (8.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.