The WACC of Happy Helper A/S (HAPPY.CO) is 4.9%.
| Range | Selected | |
| Cost of equity | 4.60% - 8.20% | 6.40% |
| Tax rate | 18.90% - 22.20% | 20.55% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.2% - 5.5% | 4.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.16 | 0.56 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 4.60% | 8.20% |
| Tax rate | 18.90% | 22.20% |
| Debt/Equity ratio | 1.68 | 1.68 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.2% | 5.5% |
| Selected WACC | 4.9% | |
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 HAPPY.CO:
cost_of_equity (6.40%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.16) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.