The WACC of Daimler AG (DAI.DE) is 5.0%.
| Range | Selected | |
| Cost of equity | 6.40% - 9.10% | 7.75% |
| Tax rate | 28.90% - 29.60% | 29.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.6% - 5.5% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.92 | 1.07 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.40% | 9.10% |
| Tax rate | 28.90% | 29.60% |
| Debt/Equity ratio | 1.8 | 1.8 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.6% | 5.5% |
| Selected WACC | 5.0% | |
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 DAI.DE:
cost_of_equity (7.75%) = risk_free_rate (2.25%) + equity_risk_premium (5.20%) * adjusted_beta (0.92) + 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.