The WACC of BRAIN Biotechnology Research and Information Network AG (BNN.DE) is 6.3%.
| Range | Selected | |
| Cost of equity | 5.20% - 7.80% | 6.50% |
| Tax rate | 6.10% - 8.70% | 7.40% |
| Cost of debt | 5.70% - 7.00% | 6.35% |
| WACC | 5.3% - 7.3% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.38 | 0.57 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.20% | 7.80% |
| Tax rate | 6.10% | 8.70% |
| Debt/Equity ratio | 0.57 | 0.57 |
| Cost of debt | 5.70% | 7.00% |
| After-tax WACC | 5.3% | 7.3% |
| Selected WACC | 6.3% | |
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 BNN.DE:
cost_of_equity (6.50%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.38) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.