The WACC of Cofina SGPS SA (CFN.LS) is 4.6%.
| Range | Selected | |
| Cost of equity | 4.80% - 7.80% | 6.30% |
| Tax rate | 37.30% - 47.40% | 42.35% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.0% - 5.2% | 4.6% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.14 | 0.37 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 4.80% | 7.80% |
| Tax rate | 37.30% | 47.40% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.0% | 5.2% |
| Selected WACC | 4.6% | |
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 CFN.LS:
cost_of_equity (6.30%) = risk_free_rate (3.15%) + equity_risk_premium (7.35%) * adjusted_beta (0.14) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.