The WACC of El Al Israel Airlines Ltd (ELAL.TA) is 8.8%.
| Range | Selected | |
| Cost of equity | 8.10% - 11.90% | 10.00% |
| Tax rate | 6.20% - 11.90% | 9.05% |
| Cost of debt | 4.10% - 5.80% | 4.95% |
| WACC | 7.2% - 10.5% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 4.8% | 5.3% |
| Equity market risk premium | 5.6% | 6.6% |
| Adjusted beta | 0.57 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.10% | 11.90% |
| Tax rate | 6.20% | 11.90% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 4.10% | 5.80% |
| After-tax WACC | 7.2% | 10.5% |
| Selected WACC | 8.8% | |
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 ELAL.TA:
cost_of_equity (10.00%) = risk_free_rate (5.05%) + equity_risk_premium (6.10%) * adjusted_beta (0.57) + 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.