The WACC of Capelli SA (CAPLI.PA) is 7.3%.
| Range | Selected | |
| Cost of equity | 14.10% - 22.30% | 18.20% |
| Tax rate | 35.00% - 36.00% | 35.50% |
| Cost of debt | 5.30% - 12.60% | 8.95% |
| WACC | 4.8% - 9.8% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 2.21 | 3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.10% | 22.30% |
| Tax rate | 35.00% | 36.00% |
| Debt/Equity ratio | 7.3 | 7.3 |
| Cost of debt | 5.30% | 12.60% |
| After-tax WACC | 4.8% | 9.8% |
| Selected WACC | 7.3% | |
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 CAPLI.PA:
cost_of_equity (18.20%) = risk_free_rate (2.85%) + equity_risk_premium (5.70%) * adjusted_beta (2.21) + 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.