The WACC of Elektrotim SA (ELT.WA) is 9.7%.
| Range | Selected | |
| Cost of equity | 8.60% - 10.60% | 9.60% |
| Tax rate | 18.50% - 22.70% | 20.60% |
| Cost of debt | 6.20% - 27.80% | 17.00% |
| WACC | 8.5% - 10.8% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.49 | 0.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.60% | 10.60% |
| Tax rate | 18.50% | 22.70% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 6.20% | 27.80% |
| After-tax WACC | 8.5% | 10.8% |
| Selected WACC | 9.7% | |
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 ELT.WA:
cost_of_equity (9.60%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.49) + 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.