The WACC of Fundamenta Real Estate AG (FREN.SW) is 4.2%.
| Range | Selected | |
| Cost of equity | 3.00% - 5.50% | 4.25% |
| Tax rate | 18.20% - 18.80% | 18.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 3.6% - 4.7% | 4.2% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.41 | 0.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.00% | 5.50% |
| Tax rate | 18.20% | 18.80% |
| Debt/Equity ratio | 1.21 | 1.21 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 3.6% | 4.7% |
| Selected WACC | 4.2% | |
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 FREN.SW:
cost_of_equity (4.25%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.41) + 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.