The WACC of Cnova NV (CNV.PA) is 8.1%.
| Range | Selected | |
| Cost of equity | 38.50% - 94.40% | 66.45% |
| Tax rate | 7.80% - 13.60% | 10.70% |
| Cost of debt | 4.00% - 9.10% | 6.55% |
| WACC | 5.0% - 11.3% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 6.1 | 13.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 38.50% | 94.40% |
| Tax rate | 7.80% | 13.60% |
| Debt/Equity ratio | 24.7 | 24.7 |
| Cost of debt | 4.00% | 9.10% |
| After-tax WACC | 5.0% | 11.3% |
| Selected WACC | 8.1% | |
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 CNV.PA:
cost_of_equity (66.45%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (6.1) + 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.