The WACC of Hypothekarbank Lenzburg AG (HBLN.SW) is 5.7%.
| Range | Selected | |
| Cost of equity | 6.70% - 13.00% | 9.85% |
| Tax rate | 15.90% - 15.90% | 15.90% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.9% - 6.5% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 1.1% | 1.6% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.18 | 1.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 13.00% |
| Tax rate | 15.90% | 15.90% |
| Debt/Equity ratio | 2.77 | 2.77 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.9% | 6.5% |
| Selected WACC | 5.7% | |
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 HBLN.SW:
cost_of_equity (9.85%) = risk_free_rate (1.35%) + equity_risk_premium (5.20%) * adjusted_beta (1.18) + 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.