BDEV.L WACC - Weighted Average Cost of Capital

The WACC of Barratt Developments P L C (BDEV.L) is 10.5%.

The Cost of Equity of Barratt Developments P L C (BDEV.L) is 10.85%.

The Cost of Debt of Barratt Developments P L C (BDEV.L) is 4.30%.

	Range	Selected
Cost of equity	8.90% - 12.80%	10.85%
Tax rate	18.70% - 19.20%	18.95%
Cost of debt	4.00% - 4.60%	4.30%
WACC	8.6% - 12.4%	10.5%

WACC

BDEV.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.81	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	12.80%

Tax rate	18.70%	19.20%
Debt/Equity ratio	0.04	0.04
Cost of debt	4.00%	4.60%

After-tax WACC	8.6%	12.4%


Selected WACC	10.5%

BDEV.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 BDEV.L:

cost_of_equity (10.85%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.81) + 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.