BUR.L WACC - Weighted Average Cost of Capital

The WACC of Burford Capital Ltd (BUR.L) is 8.1%.

The Cost of Equity of Burford Capital Ltd (BUR.L) is 11.00%.

The Cost of Debt of Burford Capital Ltd (BUR.L) is 5.50%.

	Range	Selected
Cost of equity	9.10% - 12.90%	11.00%
Tax rate	10.10% - 11.60%	10.85%
Cost of debt	5.50% - 5.50%	5.50%
WACC	7.1% - 9.1%	8.1%

WACC

BUR.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.85	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	12.90%

Tax rate	10.10%	11.60%
Debt/Equity ratio	0.89	0.89
Cost of debt	5.50%	5.50%

After-tax WACC	7.1%	9.1%


Selected WACC	8.1%

BUR.L's CAPM model and how its cost of Equity is calculated

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 BUR.L:

cost_of_equity (11.00%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.85) + 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.