The WACC of Easy Software AG (ESY.DE) is 6.8%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.00% | 6.60% |
| Tax rate | 12.10% - 14.70% | 13.40% |
| Cost of debt | 7.00% - 13.40% | 10.20% |
| WACC | 5.3% - 8.3% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.67 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.20% | 8.00% |
| Tax rate | 12.10% | 14.70% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 7.00% | 13.40% |
| After-tax WACC | 5.3% | 8.3% |
| Selected WACC | 6.8% | |
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 ESY.DE:
cost_of_equity (6.60%) = risk_free_rate (2.25%) + equity_risk_premium (5.20%) * adjusted_beta (0.67) + 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.