The WACC of GCP Student Living PLC (DIGS.L) is 5.8%.
| Range | Selected | |
| Cost of equity | 5.30% - 6.80% | 6.05% |
| Tax rate | 19.00% - 19.00% | 19.00% |
| Cost of debt | 4.00% - 7.80% | 5.90% |
| WACC | 4.8% - 6.7% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.44 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.30% | 6.80% |
| Tax rate | 19.00% | 19.00% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 4.00% | 7.80% |
| After-tax WACC | 4.8% | 6.7% |
| Selected WACC | 5.8% | |
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 DIGS.L:
cost_of_equity (6.05%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.44) + 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.