GSCT.L WACC - Weighted Average Cost of Capital

The WACC of Global Smaller Companies Trust PLC (GSCT.L) is 12.1%.

The Cost of Equity of Global Smaller Companies Trust PLC (GSCT.L) is 12.50%.

The Cost of Debt of Global Smaller Companies Trust PLC (GSCT.L) is 5.50%.

	Range	Selected
Cost of equity	10.80% - 14.20%	12.50%
Tax rate	2.30% - 2.70%	2.50%
Cost of debt	4.00% - 7.00%	5.50%
WACC	10.4% - 13.8%	12.1%

WACC

GSCT.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.15	1.33

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	14.20%

Tax rate	2.30%	2.70%
Debt/Equity ratio	0.07	0.07
Cost of debt	4.00%	7.00%

After-tax WACC	10.4%	13.8%


Selected WACC	12.1%

GSCT.L's CAPM model and how its cost of Equity is calculated

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 GSCT.L:

cost_of_equity (12.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.15) + 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.