The WACC of Bankinter SA (BKT.MC) is 7.0%.
| Range | Selected | |
| Cost of equity | 14.30% - 22.50% | 18.40% |
| Tax rate | 28.90% - 29.40% | 29.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.1% - 8.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 1.51 | 2.19 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.30% | 22.50% |
| Tax rate | 28.90% | 29.40% |
| Debt/Equity ratio | 3.29 | 3.29 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.1% | 8.0% |
| Selected WACC | 7.0% | |
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 BKT.MC:
cost_of_equity (18.40%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (1.51) + 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.