The WACC of Ecosuntek SpA (ECK.MI) is 8.2%.
| Range | Selected | |
| Cost of equity | 14.30% - 19.80% | 17.05% |
| Tax rate | 38.10% - 41.70% | 39.90% |
| Cost of debt | 4.90% - 8.60% | 6.75% |
| WACC | 6.6% - 9.8% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.28 | 1.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.30% | 19.80% |
| Tax rate | 38.10% | 41.70% |
| Debt/Equity ratio | 2.12 | 2.12 |
| Cost of debt | 4.90% | 8.60% |
| After-tax WACC | 6.6% | 9.8% |
| Selected WACC | 8.2% | |
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 ECK.MI:
cost_of_equity (17.05%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.28) + 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.