The WACC of Elve SA (ELBE.AT) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.10% - 9.40% | 8.25% |
| Tax rate | 25.70% - 28.50% | 27.10% |
| Cost of debt | 4.50% - 25.90% | 15.20% |
| WACC | 7.0% - 9.6% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.43 | 0.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 9.40% |
| Tax rate | 25.70% | 28.50% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 4.50% | 25.90% |
| After-tax WACC | 7.0% | 9.6% |
| Selected WACC | 8.3% | |
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 ELBE.AT:
cost_of_equity (8.25%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.43) + 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.