BBAS3.SA WACC - Weighted Average Cost of Capital

The WACC of Banco do Brasil SA (BBAS3.SA) is 7.5%.

The Cost of Equity of Banco do Brasil SA (BBAS3.SA) is 27.50%.

The Cost of Debt of Banco do Brasil SA (BBAS3.SA) is 5.00%.

	Range	Selected
Cost of equity	23.40% - 31.60%	27.50%
Tax rate	12.60% - 14.80%	13.70%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.0% - 8.0%	7.5%

WACC

BBAS3.SA WACC calculation

Category	Low	High

Long-term bond rate	11.9%	12.4%
Equity market risk premium	9.5%	10.5%
Adjusted beta	1.21	1.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	23.40%	31.60%

Tax rate	12.60%	14.80%
Debt/Equity ratio	6.33	6.33
Cost of debt	5.00%	5.00%

After-tax WACC	7.0%	8.0%


Selected WACC	7.5%

BBAS3.SA'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 BBAS3.SA:

cost_of_equity (27.50%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (1.21) + 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.