The WACC of Bens Creek Group PLC (BEN.L) is 4.2%.
| Range | Selected | |
| Cost of equity | 4.00% - 9.30% | 6.65% |
| Tax rate | 14.30% - 20.40% | 17.35% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.3% - 4.2% | 4.2% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | -0.59 | 0.12 |
| Additional risk adjustments | 3.5% | 4.0% |
| Cost of equity | 4.00% | 9.30% |
| Tax rate | 14.30% | 20.40% |
| Debt/Equity ratio | 23.83 | 23.83 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.3% | 4.2% |
| Selected WACC | 4.2% | |
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 BEN.L:
cost_of_equity (6.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (-0.59) + risk_adjustments (3.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.