ERA.PA WACC - Weighted Average Cost of Capital

The WACC of Eramet SA (ERA.PA) is 10.0%.

The Cost of Equity of Eramet SA (ERA.PA) is 9.10%.

The Cost of Debt of Eramet SA (ERA.PA) is 14.40%.

	Range	Selected
Cost of equity	7.60% - 10.60%	9.10%
Tax rate	25.90% - 27.10%	26.50%
Cost of debt	5.80% - 23.00%	14.40%
WACC	5.6% - 14.3%	10.0%

WACC

ERA.PA WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.8%	6.8%
Adjusted beta	0.79	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.60%	10.60%

Tax rate	25.90%	27.10%
Debt/Equity ratio	1.55	1.55
Cost of debt	5.80%	23.00%

After-tax WACC	5.6%	14.3%


Selected WACC	10.0%

ERA.PA'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 ERA.PA:

cost_of_equity (9.10%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (0.79) + 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.