DLN.L WACC - Weighted Average Cost of Capital

The WACC of Derwent London PLC (DLN.L) is 6.7%.

The Cost of Equity of Derwent London PLC (DLN.L) is 8.05%.

The Cost of Debt of Derwent London PLC (DLN.L) is 4.75%.

	Range	Selected
Cost of equity	6.80% - 9.30%	8.05%
Tax rate	0.30% - 0.40%	0.35%
Cost of debt	4.00% - 5.50%	4.75%
WACC	5.7% - 7.7%	6.7%

WACC

DLN.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.47	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	9.30%

Tax rate	0.30%	0.40%
Debt/Equity ratio	0.67	0.67
Cost of debt	4.00%	5.50%

After-tax WACC	5.7%	7.7%


Selected WACC	6.7%

DLN.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 DLN.L:

cost_of_equity (8.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.47) + 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.