CAV1V.HE WACC - Weighted Average Cost of Capital

The WACC of Caverion Oyj (CAV1V.HE) is 6.9%.

The Cost of Equity of Caverion Oyj (CAV1V.HE) is 7.75%.

The Cost of Debt of Caverion Oyj (CAV1V.HE) is 4.25%.

	Range	Selected
Cost of equity	6.30% - 9.20%	7.75%
Tax rate	26.50% - 35.00%	30.75%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.7% - 8.0%	6.9%

WACC

CAV1V.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.64	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.30%	9.20%

Tax rate	26.50%	35.00%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.00%	4.50%

After-tax WACC	5.7%	8.0%


Selected WACC	6.9%

CAV1V.HE'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 CAV1V.HE:

cost_of_equity (7.75%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.64) + 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.