The WACC of Ferronordic AB (FNM.ST) is 12.6%.
| Range | Selected | |
| Cost of equity | 8.20% - 14.30% | 11.25% |
| Tax rate | 25.30% - 29.50% | 27.40% |
| Cost of debt | 13.50% - 22.50% | 18.00% |
| WACC | 9.7% - 15.5% | 12.6% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.12 | 1.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.20% | 14.30% |
| Tax rate | 25.30% | 29.50% |
| Debt/Equity ratio | 3.56 | 3.56 |
| Cost of debt | 13.50% | 22.50% |
| After-tax WACC | 9.7% | 15.5% |
| Selected WACC | 12.6% | |
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 FNM.ST:
cost_of_equity (11.25%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (1.12) + 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.