EEM.PA WACC - Weighted Average Cost of Capital

The WACC of Electricite et Eaux De Madagascar SA (EEM.PA) is 5.6%.

The Cost of Equity of Electricite et Eaux De Madagascar SA (EEM.PA) is 6.05%.

The Cost of Debt of Electricite et Eaux De Madagascar SA (EEM.PA) is 4.25%.

	Range	Selected
Cost of equity	4.90% - 7.20%	6.05%
Tax rate	25.90% - 27.10%	26.50%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.6% - 6.6%	5.6%

WACC

EEM.PA WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.34	0.47

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	7.20%

Tax rate	25.90%	27.10%
Debt/Equity ratio	0.19	0.19
Cost of debt	4.00%	4.50%

After-tax WACC	4.6%	6.6%


Selected WACC	5.6%

EEM.PA'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 EEM.PA:

cost_of_equity (6.05%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.34) + 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.