DIG.L WACC - Weighted Average Cost of Capital
The WACC of Dunedin Income Growth Investment Trust PLC (DIG.L) is 10.0%.
| Range | Selected | |
| Cost of equity | 9.4% - 11.8% | 10.6% |
| Tax rate | 0.6% - 1.2% | 0.9% |
| Cost of debt | 4.0% - 4.6% | 4.3% |
| WACC | 8.9% - 11.1% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.91 | 0.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 11.8% |
| Tax rate | 0.6% | 1.2% |
| Debt/Equity ratio | 0.11 | 0.11 |
| Cost of debt | 4.0% | 4.6% |
| After-tax WACC | 8.9% | 11.1% |
| Selected WACC | 10.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| DIG.L | Dunedin Income Growth Investment Trust PLC | 0.11 | 0.97 | 0.87 |
| AAIF.L | Aberdeen Asian Income Fund Ltd | 0.11 | 0.92 | 0.83 |
| ATR.L | Schroder Asian Total Return Investment Company PLC | 0.07 | 0.61 | 0.57 |
| BGEU.L | Baillie Gifford European Growth Trust PLC | 0.15 | 1.01 | 0.88 |
| BRGE.L | Blackrock Greater Europe Investment Trust PLC | 0.09 | 1.12 | 1.02 |
| EAT.L | European Assets Trust PLC | 0.09 | 1.27 | 1.17 |
| FJV.L | Fidelity Japan Trust PLC | 0 | 0.87 | 0.87 |
| HONY.L | Honeycomb Investment Trust PLC | 0.75 | 0.37 | 0.21 |
| IBT.L | International Biotechnology Trust PLC | 0.1 | 0.23 | 0.21 |
| MNP.L | Martin Currie Global Portfolio Trust PLC | 0.06 | 0.73 | 0.7 |
| Low | High | |
| Unlevered beta | 0.78 | 0.87 |
| Relevered beta | 0.87 | 0.97 |
| Adjusted relevered beta | 0.91 | 0.98 |
DIG.L's CAPM model and how its cost of Equity is calculated
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 DIG.L:
cost_of_equity (10.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.91) + 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.