The WACC of Banco Pan SA (BPAN4.SA) is 7.5%.
| Range | Selected | |
| Cost of equity | 22.60% - 28.30% | 25.45% |
| Tax rate | 30.20% - 36.10% | 33.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.1% - 8.0% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 11.9% | 12.4% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.13 | 1.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.60% | 28.30% |
| Tax rate | 30.20% | 36.10% |
| Debt/Equity ratio | 4.27 | 4.27 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.1% | 8.0% |
| Selected WACC | 7.5% | |
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 BPAN4.SA:
cost_of_equity (25.45%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (1.13) + 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.