The WACC of Green Landscaping Group AB (GREEN.ST) is 5.4%.
| Range | Selected | |
| Cost of equity | 5.60% - 8.10% | 6.85% |
| Tax rate | 25.20% - 26.00% | 25.60% |
| Cost of debt | 4.60% - 5.70% | 5.15% |
| WACC | 4.6% - 6.3% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.6 | 0.75 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.60% | 8.10% |
| Tax rate | 25.20% | 26.00% |
| Debt/Equity ratio | 0.83 | 0.83 |
| Cost of debt | 4.60% | 5.70% |
| After-tax WACC | 4.6% | 6.3% |
| Selected WACC | 5.4% | |
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 GREEN.ST:
cost_of_equity (6.85%) = risk_free_rate (2.75%) + 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.