The WACC of Harel Insurance Investments and Financial Services Ltd (HARL.TA) is 9.4%.
| Range | Selected | |
| Cost of equity | 11.80% - 20.00% | 15.90% |
| Tax rate | 28.80% - 29.10% | 28.95% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.5% - 11.4% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 4.8% | 5.3% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.14 | 1.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.80% | 20.00% |
| Tax rate | 28.80% | 29.10% |
| Debt/Equity ratio | 1.11 | 1.11 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.5% | 11.4% |
| Selected WACC | 9.4% | |
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 HARL.TA:
cost_of_equity (15.90%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (1.14) + 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.