The WACC of Cosan SA (CSAN3.SA) is 15.4%.
| Range | Selected | |
| Cost of equity | 17.90% - 22.10% | 20.00% |
| Tax rate | 6.70% - 13.40% | 10.05% |
| Cost of debt | 8.90% - 23.60% | 16.25% |
| WACC | 10.0% - 20.8% | 15.4% |
| Category | Low | High |
| Long-term bond rate | 11.9% | 12.4% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.64 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.90% | 22.10% |
| Tax rate | 6.70% | 13.40% |
| Debt/Equity ratio | 4.88 | 4.88 |
| Cost of debt | 8.90% | 23.60% |
| After-tax WACC | 10.0% | 20.8% |
| Selected WACC | 15.4% | |
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 CSAN3.SA:
cost_of_equity (20.00%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (0.64) + 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.