ERM.L
Euromoney Institutional Investor PLC
Price:  
1,460.00 
GBP
Volume:  
4,978,000.00
United Kingdom | Media
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ERM.L WACC - Weighted Average Cost of Capital

The WACC of Euromoney Institutional Investor PLC (ERM.L) is 6.8%.

The Cost of Equity of Euromoney Institutional Investor PLC (ERM.L) is 6.95%.
The Cost of Debt of Euromoney Institutional Investor PLC (ERM.L) is 4.60%.

Range Selected
Cost of equity 5.90% - 8.00% 6.95%
Tax rate 19.00% - 31.20% 25.10%
Cost of debt 4.60% - 4.60% 4.60%
WACC 5.9% - 7.8% 6.8%
WACC

ERM.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.33 0.43
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 8.00%
Tax rate 19.00% 31.20%
Debt/Equity ratio 0.04 0.04
Cost of debt 4.60% 4.60%
After-tax WACC 5.9% 7.8%
Selected WACC 6.8%

ERM.L'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 ERM.L:

cost_of_equity (6.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.33) + 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.