FGT.L WACC - Weighted Average Cost of Capital
The WACC of Finsbury Growth & Income Trust PLC (FGT.L) is 9.0%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.6% | 9.1% |
| Tax rate | 0.5% - 0.7% | 0.6% |
| Cost of debt | 4.0% - 4.6% | 4.3% |
| WACC | 7.5% - 10.4% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.6 | 0.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.6% |
| Tax rate | 0.5% | 0.7% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 4.0% | 4.6% |
| After-tax WACC | 7.5% | 10.4% |
| Selected WACC | 9.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FGT.L | Finsbury Growth & Income Trust PLC | 0.02 | 0.7 | 0.68 |
| CGW.L | Chelverton Growth Trust PLC | 0.11 | 0.19 | 0.17 |
| GV2O.L | Gresham House Renewable Energy VCT 2 PLC | 0.12 | -0.06 | -0.06 |
| MMM.L | Mining Minerals & Metals PLC | 0.03 | 1.04 | 1.01 |
| NBPE.L | NB Private Equity Partners Ltd | 0.2 | 1.28 | 1.07 |
| VCBC.L | Vertu Capital Ltd | 1.53 | 0.98 | 0.39 |
| Low | High | |
| Unlevered beta | 0.39 | 0.68 |
| Relevered beta | 0.4 | 0.7 |
| Adjusted relevered beta | 0.6 | 0.8 |
FGT.L'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 FGT.L:
cost_of_equity (9.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.6) + 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.