FRAS.L WACC - Weighted Average Cost of Capital

The WACC of Frasers Group PLC (FRAS.L) is 8.3%.

The Cost of Equity of Frasers Group PLC (FRAS.L) is 10.90%.

The Cost of Debt of Frasers Group PLC (FRAS.L) is 4.45%.

	Range	Selected
Cost of equity	9.30% - 12.50%	10.90%
Tax rate	24.80% - 26.80%	25.80%
Cost of debt	4.00% - 4.90%	4.45%
WACC	7.1% - 9.5%	8.3%

WACC

FRAS.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.88	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	12.50%

Tax rate	24.80%	26.80%
Debt/Equity ratio	0.51	0.51
Cost of debt	4.00%	4.90%

After-tax WACC	7.1%	9.5%


Selected WACC	8.3%

FRAS.L'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 FRAS.L:

cost_of_equity (10.90%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.88) + 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.