The WACC of GB Group PLC (GBG.L) is 10.0%.
| Range | Selected | |
| Cost of equity | 9.00% - 11.90% | 10.45% |
| Tax rate | 14.40% - 24.70% | 19.55% |
| Cost of debt | 5.20% - 13.40% | 9.30% |
| WACC | 8.4% - 11.6% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.84 | 0.98 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.00% | 11.90% |
| Tax rate | 14.40% | 24.70% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 5.20% | 13.40% |
| After-tax WACC | 8.4% | 11.6% |
| Selected WACC | 10.0% | |
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 GBG.L:
cost_of_equity (10.45%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.84) + 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.