The WACC of Circle Property PLC (CRC.L) is 5.8%.
| Range | Selected | |
| Cost of equity | 11.50% - 27.80% | 19.65% |
| Tax rate | 5.90% - 14.20% | 10.05% |
| Cost of debt | 4.00% - 7.60% | 5.80% |
| WACC | 4.1% - 7.5% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.26 | 3.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.50% | 27.80% |
| Tax rate | 5.90% | 14.20% |
| Debt/Equity ratio | 20.91 | 20.91 |
| Cost of debt | 4.00% | 7.60% |
| After-tax WACC | 4.1% | 7.5% |
| Selected WACC | 5.8% | |
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 CRC.L:
cost_of_equity (19.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.