CAF.MC
Construcciones Y Auxiliar De Ferrocarriles SA
Price:  
51.30 
EUR
Volume:  
25,420.00
Spain | Machinery
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CAF.MC WACC - Weighted Average Cost of Capital

The WACC of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 9.5%.

The Cost of Equity of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 12.80%.
The Cost of Debt of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 4.55%.

Range Selected
Cost of equity 11.10% - 14.50% 12.80%
Tax rate 33.80% - 36.50% 35.15%
Cost of debt 4.20% - 4.90% 4.55%
WACC 8.3% - 10.6% 9.5%
WACC

CAF.MC WACC calculation

Category Low High
Long-term bond rate 3.1% 3.6%
Equity market risk premium 7.4% 8.4%
Adjusted beta 1.08 1.23
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.10% 14.50%
Tax rate 33.80% 36.50%
Debt/Equity ratio 0.51 0.51
Cost of debt 4.20% 4.90%
After-tax WACC 8.3% 10.6%
Selected WACC 9.5%

CAF.MC'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 CAF.MC:

cost_of_equity (12.80%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (1.08) + 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.