The WACC of Fjord1 ASA (FJORD.OL) is 6.4%.
| Range | Selected | |
| Cost of equity | 6.70% - 10.20% | 8.45% |
| Tax rate | 18.90% - 20.30% | 19.60% |
| Cost of debt | 4.30% - 7.10% | 5.70% |
| WACC | 5.0% - 7.8% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.78 | 1.07 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 10.20% |
| Tax rate | 18.90% | 20.30% |
| Debt/Equity ratio | 1.16 | 1.16 |
| Cost of debt | 4.30% | 7.10% |
| After-tax WACC | 5.0% | 7.8% |
| Selected WACC | 6.4% | |
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 FJORD.OL:
cost_of_equity (8.45%) = risk_free_rate (3.35%) + equity_risk_premium (5.20%) * adjusted_beta (0.78) + 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.