The WACC of GRC International Group PLC (GRC.L) is 7.4%.
| Range | Selected | |
| Cost of equity | 5.50% - 7.60% | 6.55% |
| Tax rate | 5.80% - 10.50% | 8.15% |
| Cost of debt | 7.00% - 19.80% | 13.40% |
| WACC | 5.6% - 9.1% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.16 | 0.31 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.50% | 7.60% |
| Tax rate | 5.80% | 10.50% |
| Debt/Equity ratio | 0.17 | 0.17 |
| Cost of debt | 7.00% | 19.80% |
| After-tax WACC | 5.6% | 9.1% |
| 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 GRC.L:
cost_of_equity (6.55%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.16) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.