The WACC of Banca Generali SpA (BGN.MI) is 6.1%.
| Range | Selected | |
| Cost of equity | 10.60% - 14.10% | 12.35% |
| Tax rate | 22.90% - 25.20% | 24.05% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.7% - 6.6% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.84 | 1.01 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.60% | 14.10% |
| Tax rate | 22.90% | 25.20% |
| Debt/Equity ratio | 2.65 | 2.65 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.7% | 6.6% |
| Selected WACC | 6.1% | |
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 BGN.MI:
cost_of_equity (12.35%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.84) + 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.