The WACC of Banca Popolare di Sondrio ScpA (BPSO.MI) is 10.5%.
| Range | Selected | |
| Cost of equity | 13.70% - 18.10% | 15.90% |
| Tax rate | 29.70% - 30.70% | 30.20% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 9.3% - 11.7% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.21 | 1.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.70% | 18.10% |
| Tax rate | 29.70% | 30.70% |
| Debt/Equity ratio | 0.78 | 0.78 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 9.3% | 11.7% |
| Selected WACC | 10.5% | |
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 BPSO.MI:
cost_of_equity (15.90%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.21) + 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.