The WACC of Clean Industry Solutions Holding Europe AB (CISH.ST) is 4.4%.
| Range | Selected | |
| Cost of equity | 3.40% - 4.10% | 3.75% |
| Tax rate | -% - -% | -% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.2% - 4.5% | 4.4% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.32 | -0.32 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 3.40% | 4.10% |
| Tax rate | -% | -% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.2% | 4.5% |
| Selected WACC | 4.4% | |
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 CISH.ST:
cost_of_equity (3.75%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (-0.32) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.