FESTI.IC WACC - Weighted Average Cost of Capital

The WACC of Festi hf (FESTI.IC) is 11.3%.

The Cost of Equity of Festi hf (FESTI.IC) is 13.45%.

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

	Range	Selected
Cost of equity	12.10% - 14.80%	13.45%
Tax rate	18.00% - 18.80%	18.40%
Cost of debt	6.60% - 10.20%	8.40%
WACC	9.9% - 12.7%	11.3%

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	0.79	0.92

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.10%	14.80%

Tax rate	18.00%	18.80%
Debt/Equity ratio	0.48	0.48
Cost of debt	6.60%	10.20%

After-tax WACC	9.9%	12.7%


Selected WACC	11.3%

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 (13.45%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.79) + 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.