FESTI.IC WACC - Weighted Average Cost of Capital

The WACC of Festi hf (FESTI.IC) is 11.4%.

The Cost of Equity of Festi hf (FESTI.IC) is 13.55%.

The Cost of Debt of Festi hf (FESTI.IC) is 8.40%.

	Range	Selected
Cost of equity	12.20% - 14.90%	13.55%
Tax rate	18.00% - 18.80%	18.40%
Cost of debt	6.60% - 10.20%	8.40%
WACC	10.0% - 12.8%	11.4%

WACC

FESTI.IC WACC calculation

Category	Low	High

Long-term bond rate	7.1%	7.6%
Equity market risk premium	6.3%	7.3%
Adjusted beta	0.81	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.20%	14.90%

Tax rate	18.00%	18.80%
Debt/Equity ratio	0.47	0.47
Cost of debt	6.60%	10.20%

After-tax WACC	10.0%	12.8%


Selected WACC	11.4%

FESTI.IC'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 FESTI.IC:

cost_of_equity (13.55%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.81) + 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.