The WACC of X5 Retail Group NV (FIVE.L) is 6.8%.
Range | Selected | |
Cost of equity | 7.90% - 11.40% | 9.65% |
Tax rate | 28.40% - 33.00% | 30.70% |
Cost of debt | 4.00% - 12.60% | 8.30% |
WACC | 4.3% - 9.3% | 6.8% |
Category | Low | High |
Long-term bond rate | 1.7% | 2.2% |
Equity market risk premium | 4.8% | 5.8% |
Adjusted beta | 1.29 | 1.5 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.90% | 11.40% |
Tax rate | 28.40% | 33.00% |
Debt/Equity ratio | 2.6 | 2.6 |
Cost of debt | 4.00% | 12.60% |
After-tax WACC | 4.3% | 9.3% |
Selected WACC | 6.8% | |
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 FIVE.L:
cost_of_equity (9.65%) = risk_free_rate (1.95%) + equity_risk_premium (5.30%) * adjusted_beta (1.29) + 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.