The WACC of Golden Energy Offshore Services AS (GEOS.OL) is 13.8%.
| Range | Selected | |
| Cost of equity | 6.40% - 13.60% | 10.00% |
| Tax rate | -% - 0.10% | 0.05% |
| Cost of debt | 10.90% - 20.30% | 15.60% |
| WACC | 9.5% - 18.2% | 13.8% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.6 | 1.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.40% | 13.60% |
| Tax rate | -% | 0.10% |
| Debt/Equity ratio | 2.2 | 2.2 |
| Cost of debt | 10.90% | 20.30% |
| After-tax WACC | 9.5% | 18.2% |
| Selected WACC | 13.8% | |
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 GEOS.OL:
cost_of_equity (10.00%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.6) + 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.