The WACC of Blue Planet Investment Trust PLC (BLP.L) is 7.9%.
| Range | Selected | |
| Cost of equity | 5.80% - 9.00% | 7.40% |
| Tax rate | 0.80% - 2.00% | 1.40% |
| Cost of debt | 7.00% - 12.60% | 9.80% |
| WACC | 6.1% - 9.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.53 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.80% | 9.00% |
| Tax rate | 0.80% | 2.00% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 7.00% | 12.60% |
| After-tax WACC | 6.1% | 9.8% |
| Selected WACC | 7.9% | |
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 BLP.L:
cost_of_equity (7.40%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.53) + 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.