The WACC of Bong AB (BONG.ST) is 10.4%.
| Range | Selected | |
| Cost of equity | 4.70% - 8.00% | 6.35% |
| Tax rate | 20.60% - 20.90% | 20.75% |
| Cost of debt | 7.70% - 22.50% | 15.10% |
| WACC | 5.7% - 15.2% | 10.4% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.43 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.70% | 8.00% |
| Tax rate | 20.60% | 20.90% |
| Debt/Equity ratio | 2.71 | 2.71 |
| Cost of debt | 7.70% | 22.50% |
| After-tax WACC | 5.7% | 15.2% |
| Selected WACC | 10.4% | |
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 BONG.ST:
cost_of_equity (6.35%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (0.43) + 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.