The WACC of Hoist Finance AB (publ) (HOFI.ST) is 7.8%.
| Range | Selected | |
| Cost of equity | 4.90% - 7.20% | 6.05% |
| Tax rate | 21.90% - 33.20% | 27.55% |
| Cost of debt | 4.00% - 19.50% | 11.75% |
| WACC | 3.4% - 12.2% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.46 | 0.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.90% | 7.20% |
| Tax rate | 21.90% | 33.20% |
| Debt/Equity ratio | 6.07 | 6.07 |
| Cost of debt | 4.00% | 19.50% |
| After-tax WACC | 3.4% | 12.2% |
| Selected WACC | 7.8% | |
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 HOFI.ST:
cost_of_equity (6.05%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (0.46) + 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.