The WACC of Grafenia PLC (GRA.L) is 6.5%.
| Range | Selected | |
| Cost of equity | 6.30% - 8.30% | 7.30% |
| Tax rate | 16.50% - 31.00% | 23.75% |
| Cost of debt | 4.20% - 7.00% | 5.60% |
| WACC | 5.6% - 7.4% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 4.4% | 4.9% |
| Equity market risk premium | 6.4% | 7.4% |
| Adjusted beta | 0.29 | 0.39 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.30% | 8.30% |
| Tax rate | 16.50% | 31.00% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 4.20% | 7.00% |
| After-tax WACC | 5.6% | 7.4% |
| Selected WACC | 6.5% | |
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 GRA.L:
cost_of_equity (7.30%) = risk_free_rate (4.65%) + equity_risk_premium (6.90%) * adjusted_beta (0.29) + 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.