CAF.MC WACC - Weighted Average Cost of Capital

The WACC of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 8.8%.

The Cost of Equity of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 12.45%.

The Cost of Debt of Construcciones Y Auxiliar De Ferrocarriles SA (CAF.MC) is 4.60%.

	Range	Selected
Cost of equity	11.00% - 13.90%	12.45%
Tax rate	33.80% - 36.50%	35.15%
Cost of debt	4.30% - 4.90%	4.60%
WACC	7.9% - 9.8%	8.8%

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	1.06	1.16

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	13.90%

Tax rate	33.80%	36.50%
Debt/Equity ratio	0.62	0.62
Cost of debt	4.30%	4.90%

After-tax WACC	7.9%	9.8%


Selected WACC	8.8%

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 (12.45%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (1.06) + 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.