The WACC of FILA Fabbrica Italiana Lapis ed Affini SpA (FILA.MI) is 9.8%.
| Range | Selected | |
| Cost of equity | 11.30% - 17.80% | 14.55% |
| Tax rate | 23.20% - 25.60% | 24.40% |
| Cost of debt | 4.70% - 5.40% | 5.05% |
| WACC | 7.9% - 11.7% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.92 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.30% | 17.80% |
| Tax rate | 23.20% | 25.60% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 4.70% | 5.40% |
| After-tax WACC | 7.9% | 11.7% |
| Selected WACC | 9.8% | |
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 FILA.MI:
cost_of_equity (14.55%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.92) + 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.