The WACC of EFG International AG (EFGN.SW) is 7.4%.
| Range | Selected | |
| Cost of equity | 7.20% - 12.20% | 9.70% |
| Tax rate | 13.60% - 14.70% | 14.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.0% - 8.9% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.23 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.20% | 12.20% |
| Tax rate | 13.60% | 14.70% |
| Debt/Equity ratio | 0.74 | 0.74 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.0% | 8.9% |
| Selected WACC | 7.4% | |
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 EFGN.SW:
cost_of_equity (9.70%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (1.23) + 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.