ELCO.TA WACC - Weighted Average Cost of Capital

The WACC of Elco Ltd (ELCO.TA) is 10.4%.

The Cost of Equity of Elco Ltd (ELCO.TA) is 11.50%.

The Cost of Debt of Elco Ltd (ELCO.TA) is 13.30%.

	Range	Selected
Cost of equity	10.00% - 13.00%	11.50%
Tax rate	22.70% - 28.00%	25.35%
Cost of debt	13.30% - 13.30%	13.30%
WACC	10.2% - 10.6%	10.4%

WACC

ELCO.TA WACC calculation

Category	Low	High

Long-term bond rate	4.8%	5.3%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.85	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	13.00%

Tax rate	22.70%	28.00%
Debt/Equity ratio	2.29	2.29
Cost of debt	13.30%	13.30%

After-tax WACC	10.2%	10.6%


Selected WACC	10.4%

ELCO.TA'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 ELCO.TA:

cost_of_equity (11.50%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.85) + 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.