The WACC of Euroafrica Digital Ventures AB (EURA.ST) is 18.5%.
| Range | Selected | |
| Cost of equity | 22.60% - 27.60% | 25.10% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 7.00% - 16.60% | 11.80% |
| WACC | 14.8% - 22.1% | 18.5% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 3.95 | 3.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 22.60% | 27.60% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.00% | 16.60% |
| After-tax WACC | 14.8% | 22.1% |
| Selected WACC | 18.5% | |
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 EURA.ST:
cost_of_equity (25.10%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (3.95) + 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.