The WACC of Caltagirone SpA (CALT.MI) is 12.1%.
| Range | Selected | |
| Cost of equity | 12.60% - 16.40% | 14.50% |
| Tax rate | 20.00% - 20.80% | 20.40% |
| Cost of debt | 4.20% - 4.50% | 4.35% |
| WACC | 10.6% - 13.7% | 12.1% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.08 | 1.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.60% | 16.40% |
| Tax rate | 20.00% | 20.80% |
| Debt/Equity ratio | 0.27 | 0.27 |
| Cost of debt | 4.20% | 4.50% |
| After-tax WACC | 10.6% | 13.7% |
| Selected WACC | 12.1% | |
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 CALT.MI:
cost_of_equity (14.50%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * 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.