BGEU.L WACC - Weighted Average Cost of Capital

The WACC of Baillie Gifford European Growth Trust PLC (BGEU.L) is 11.1%.

The Cost of Equity of Baillie Gifford European Growth Trust PLC (BGEU.L) is 12.20%.

The Cost of Debt of Baillie Gifford European Growth Trust PLC (BGEU.L) is 4.30%.

	Range	Selected
Cost of equity	10.90% - 13.50%	12.20%
Tax rate	0.40% - 0.60%	0.50%
Cost of debt	4.00% - 4.60%	4.30%
WACC	10.0% - 12.3%	11.1%

WACC

BGEU.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.15	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.90%	13.50%

Tax rate	0.40%	0.60%
Debt/Equity ratio	0.15	0.15
Cost of debt	4.00%	4.60%

After-tax WACC	10.0%	12.3%


Selected WACC	11.1%

BGEU.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 BGEU.L:

cost_of_equity (12.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.15) + 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.