The WACC of Edenville Energy PLC (EDL.L) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.00% - 8.80% | 7.90% |
| Tax rate | -% - -% | -% |
| Cost of debt | 5.30% - 7.00% | 6.15% |
| WACC | 7.0% - 8.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 4.4% | 4.9% |
| Equity market risk premium | 6.4% | 7.4% |
| Adjusted beta | 0.4 | 0.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 8.80% |
| Tax rate | -% | -% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 5.30% | 7.00% |
| After-tax WACC | 7.0% | 8.8% |
| Selected WACC | 7.9% | |
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 EDL.L:
cost_of_equity (7.90%) = risk_free_rate (4.65%) + equity_risk_premium (6.90%) * adjusted_beta (0.4) + 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.