BKG.L WACC - Weighted Average Cost of Capital

The WACC of Berkeley Group Holdings PLC (BKG.L) is 10.8%.

The Cost of Equity of Berkeley Group Holdings PLC (BKG.L) is 12.30%.

The Cost of Debt of Berkeley Group Holdings PLC (BKG.L) is 4.30%.

	Range	Selected
Cost of equity	9.70% - 14.90%	12.30%
Tax rate	21.10% - 24.80%	22.95%
Cost of debt	4.00% - 4.60%	4.30%
WACC	8.6% - 12.9%	10.8%

WACC

BKG.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.95	1.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.70%	14.90%

Tax rate	21.10%	24.80%
Debt/Equity ratio	0.2	0.2
Cost of debt	4.00%	4.60%

After-tax WACC	8.6%	12.9%


Selected WACC	10.8%

BKG.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 BKG.L:

cost_of_equity (12.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.95) + 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.