FRO
Frontline Plc
Price:  
18.28 
USD
Volume:  
3,433,253.00
Cyprus | Oil, Gas & Consumable Fuels
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Frontline WACC - Weighted Average Cost of Capital

The WACC of Frontline Plc (FRO) is 8.6%.

The Cost of Equity of Frontline Plc (FRO) is 10.65%.
The Cost of Debt of Frontline Plc (FRO) is 6.40%.

Range Selected
Cost of equity 9.00% - 12.30% 10.65%
Tax rate 0.10% - 0.70% 0.40%
Cost of debt 5.30% - 7.50% 6.40%
WACC 7.2% - 10.0% 8.6%
WACC

Frontline WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.13 1.33
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.00% 12.30%
Tax rate 0.10% 0.70%
Debt/Equity ratio 0.92 0.92
Cost of debt 5.30% 7.50%
After-tax WACC 7.2% 10.0%
Selected WACC 8.6%

Frontline'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 Frontline:

cost_of_equity (10.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.13) + 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.