CNN.L WACC - Weighted Average Cost of Capital

The WACC of Caledonian Trust PLC (CNN.L) is 6.8%.

The Cost of Equity of Caledonian Trust PLC (CNN.L) is 8.85%.

The Cost of Debt of Caledonian Trust PLC (CNN.L) is 5.85%.

	Range	Selected
Cost of equity	7.90% - 9.80%	8.85%
Tax rate	19.00% - 19.00%	19.00%
Cost of debt	4.70% - 7.00%	5.85%
WACC	5.9% - 7.8%	6.8%

WACC

CNN.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.66	0.7

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	9.80%

Tax rate	19.00%	19.00%
Debt/Equity ratio	0.97	0.97
Cost of debt	4.70%	7.00%

After-tax WACC	5.9%	7.8%


Selected WACC	6.8%

CNN.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 CNN.L:

cost_of_equity (8.85%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.66) + 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.