FEMSAUBD.MX WACC - Weighted Average Cost of Capital

The WACC of Fomento Economico Mexicano SAB de CV (FEMSAUBD.MX) is 13.9%.

The Cost of Equity of Fomento Economico Mexicano SAB de CV (FEMSAUBD.MX) is 17.60%.

The Cost of Debt of Fomento Economico Mexicano SAB de CV (FEMSAUBD.MX) is 8.25%.

	Range	Selected
Cost of equity	16.60% - 18.60%	17.60%
Tax rate	32.20% - 36.10%	34.15%
Cost of debt	5.50% - 11.00%	8.25%
WACC	12.7% - 15.1%	13.9%

WACC

FEMSAUBD.MX WACC calculation

Category	Low	High

Long-term bond rate	10.1%	10.6%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.82	0.84

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.60%	18.60%

Tax rate	32.20%	36.10%
Debt/Equity ratio	0.42	0.42
Cost of debt	5.50%	11.00%

After-tax WACC	12.7%	15.1%


Selected WACC	13.9%

FEMSAUBD.MX'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 FEMSAUBD.MX:

cost_of_equity (17.60%) = risk_free_rate (10.35%) + equity_risk_premium (8.40%) * adjusted_beta (0.82) + 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.