The WACC of European Reliance General Insurance Co SA (EUPIC.AT) is 9.6%.
| Range | Selected | |
| Cost of equity | 8.60% - 10.70% | 9.65% |
| Tax rate | 23.80% - 27.10% | 25.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.6% - 10.7% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.61 | 0.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.60% | 10.70% |
| Tax rate | 23.80% | 27.10% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.6% | 10.7% |
| Selected WACC | 9.6% | |
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 EUPIC.AT:
cost_of_equity (9.65%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.61) + 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.