The WACC of Hexicon AB (HEXI.ST) is 5.0%.
| Range | Selected | |
| Cost of equity | 3.80% - 40.00% | 21.90% |
| Tax rate | 0.20% - 0.20% | 0.20% |
| Cost of debt | 4.10% - 4.50% | 4.30% |
| WACC | 4.1% - 6.0% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -8.57 | -1.4 |
| Additional risk adjustments | 45.0% | 45.5% |
| Cost of equity | 3.80% | 40.00% |
| Tax rate | 0.20% | 0.20% |
| Debt/Equity ratio | 22.51 | 22.51 |
| Cost of debt | 4.10% | 4.50% |
| After-tax WACC | 4.1% | 6.0% |
| Selected WACC | 5.0% | |
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 HEXI.ST:
cost_of_equity (21.90%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (-8.57) + risk_adjustments (45.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.