ENC.MC WACC - Weighted Average Cost of Capital

The WACC of Ence Energia y Celulosa SA (ENC.MC) is 6.2%.

The Cost of Equity of Ence Energia y Celulosa SA (ENC.MC) is 8.70%.

The Cost of Debt of Ence Energia y Celulosa SA (ENC.MC) is 4.65%.

	Range	Selected
Cost of equity	7.30% - 10.10%	8.70%
Tax rate	21.50% - 34.10%	27.80%
Cost of debt	4.00% - 5.30%	4.65%
WACC	5.4% - 7.1%	6.2%

WACC

ENC.MC WACC calculation

Category	Low	High

Long-term bond rate	3.1%	3.6%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.57	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.30%	10.10%

Tax rate	21.50%	34.10%
Debt/Equity ratio	0.86	0.86
Cost of debt	4.00%	5.30%

After-tax WACC	5.4%	7.1%


Selected WACC	6.2%

ENC.MC'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 ENC.MC:

cost_of_equity (8.70%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * 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.