The WACC of Danieli & C Officine Meccaniche SpA (DAN.MI) is 11.0%.
| Range | Selected | |
| Cost of equity | 10.80% - 14.50% | 12.65% |
| Tax rate | 22.40% - 22.80% | 22.60% |
| Cost of debt | 5.10% - 5.40% | 5.25% |
| WACC | 9.5% - 12.5% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.86 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.80% | 14.50% |
| Tax rate | 22.40% | 22.80% |
| Debt/Equity ratio | 0.24 | 0.24 |
| Cost of debt | 5.10% | 5.40% |
| After-tax WACC | 9.5% | 12.5% |
| Selected WACC | 11.0% | |
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 DAN.MI:
cost_of_equity (12.65%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.86) + 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.