The WACC of EnterSoft SA (ENTER.AT) is 9.7%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.30% | 9.65% |
| Tax rate | 13.50% - 15.70% | 14.60% |
| Cost of debt | 4.00% - 21.90% | 12.95% |
| WACC | 7.8% - 11.6% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.53 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.30% |
| Tax rate | 13.50% | 15.70% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.00% | 21.90% |
| After-tax WACC | 7.8% | 11.6% |
| 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 ENTER.AT:
cost_of_equity (9.65%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.53) + 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.