The WACC of Cruzeiro do Sul Educacional SA (CSED3.SA) is 11.7%.
| Range | Selected | |
| Cost of equity | 21.20% - 26.70% | 23.95% |
| Tax rate | 3.60% - 4.00% | 3.80% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.7% - 12.7% | 11.7% |
| Category | Low | High |
| Long-term bond rate | 11.9% | 12.4% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.98 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 21.20% | 26.70% |
| Tax rate | 3.60% | 4.00% |
| Debt/Equity ratio | 1.79 | 1.79 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.7% | 12.7% |
| Selected WACC | 11.7% | |
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 CSED3.SA:
cost_of_equity (23.95%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (0.98) + 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.