HONBS.HE WACC - Weighted Average Cost of Capital

The WACC of Honkarakenne Oyj (HONBS.HE) is 7.6%.

The Cost of Equity of Honkarakenne Oyj (HONBS.HE) is 8.50%.

The Cost of Debt of Honkarakenne Oyj (HONBS.HE) is 5.50%.

	Range	Selected
Cost of equity	6.90% - 10.10%	8.50%
Tax rate	13.20% - 17.20%	15.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.1% - 9.1%	7.6%

WACC

HONBS.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.74	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.10%

Tax rate	13.20%	17.20%
Debt/Equity ratio	0.29	0.29
Cost of debt	4.00%	7.00%

After-tax WACC	6.1%	9.1%


Selected WACC	7.6%

HONBS.HE's CAPM model and how its cost of Equity is calculated

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 HONBS.HE:

cost_of_equity (8.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.74) + 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.