The WACC of DDM Holding AG (DDM.ST) is 13.8%.
| Range | Selected | |
| Cost of equity | 5.50% - 7.90% | 6.70% |
| Tax rate | 9.40% - 10.60% | 10.00% |
| Cost of debt | 10.30% - 22.50% | 16.40% |
| WACC | 8.9% - 18.7% | 13.8% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.49 | 0.64 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.50% | 7.90% |
| Tax rate | 9.40% | 10.60% |
| Debt/Equity ratio | 7.31 | 7.31 |
| Cost of debt | 10.30% | 22.50% |
| After-tax WACC | 8.9% | 18.7% |
| Selected WACC | 13.8% | |
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 DDM.ST:
cost_of_equity (6.70%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (0.49) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.