The WACC of Electra Gruppen AB (publ) (ELEC.ST) is 6.3%.
| Range | Selected | |
| Cost of equity | 6.00% - 8.50% | 7.25% |
| Tax rate | 22.20% - 22.70% | 22.45% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.3% - 7.3% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 0.6% | 1.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 1.02 | 1.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 8.50% |
| Tax rate | 22.20% | 22.70% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.3% | 7.3% |
| Selected WACC | 6.3% | |
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 ELEC.ST:
cost_of_equity (7.25%) = risk_free_rate (0.85%) + equity_risk_premium (5.70%) * adjusted_beta (1.02) + 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.