CLIG.L
City of London Investment Group PLC
Price:  
349 
GBP
Volume:  
45,465
United Kingdom | Capital Markets

CLIG.L WACC - Weighted Average Cost of Capital

The WACC of City of London Investment Group PLC (CLIG.L) is 8.4%.

The Cost of Equity of City of London Investment Group PLC (CLIG.L) is 8.6%.
The Cost of Debt of City of London Investment Group PLC (CLIG.L) is 6.35%.

RangeSelected
Cost of equity7.5% - 9.7%8.6%
Tax rate21.8% - 22.6%22.2%
Cost of debt4.6% - 8.1%6.35%
WACC7.4% - 9.5%8.4%
WACC

CLIG.L WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium6.0%7.0%
Adjusted beta0.580.67
Additional risk adjustments0.0%0.5%
Cost of equity7.5%9.7%
Tax rate21.8%22.6%
Debt/Equity ratio
0.030.03
Cost of debt4.6%8.1%
After-tax WACC7.4%9.5%
Selected WACC8.4%

CLIG.L'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 CLIG.L:

cost_of_equity (8.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.