FORTY.TA WACC - Weighted Average Cost of Capital

The WACC of Formula Systems 1985 Ltd (FORTY.TA) is 7.5%.

The Cost of Equity of Formula Systems 1985 Ltd (FORTY.TA) is 9.55%.

The Cost of Debt of Formula Systems 1985 Ltd (FORTY.TA) is 4.25%.

	Range	Selected
Cost of equity	8.40% - 10.70%	9.55%
Tax rate	23.00% - 23.50%	23.25%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.6% - 8.3%	7.5%

WACC

FORTY.TA WACC calculation

Category	Low	High

Long-term bond rate	3.0%	3.5%
Equity market risk premium	5.4%	6.4%
Adjusted beta	1	1.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.40%	10.70%

Tax rate	23.00%	23.50%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.00%	4.50%

After-tax WACC	6.6%	8.3%


Selected WACC	7.5%

FORTY.TA'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 FORTY.TA:

cost_of_equity (9.55%) = risk_free_rate (3.25%) + equity_risk_premium (5.90%) * adjusted_beta (1) + 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.