The WACC of Feintool International Holding AG (FTON.SW) is 7.4%.
| Range | Selected | |
| Cost of equity | 4.70% - 8.40% | 6.55% |
| Tax rate | 24.20% - 27.70% | 25.95% |
| Cost of debt | 5.30% - 18.00% | 11.65% |
| WACC | 4.4% - 10.4% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.33 | 0.73 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 4.70% | 8.40% |
| Tax rate | 24.20% | 27.70% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 5.30% | 18.00% |
| After-tax WACC | 4.4% | 10.4% |
| Selected WACC | 7.4% | |
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 FTON.SW:
cost_of_equity (6.55%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.33) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.