HREN.SW WACC - Weighted Average Cost of Capital

The WACC of Romande Energie Holding SA (HREN.SW) is 5.9%.

The Cost of Equity of Romande Energie Holding SA (HREN.SW) is 6.05%.

The Cost of Debt of Romande Energie Holding SA (HREN.SW) is 4.25%.

	Range	Selected
Cost of equity	5.10% - 7.00%	6.05%
Tax rate	11.50% - 13.60%	12.55%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.0% - 6.8%	5.9%

WACC

HREN.SW WACC calculation

Category	Low	High

Long-term bond rate	1.4%	1.9%
Equity market risk premium	5.5%	6.5%
Adjusted beta	0.4	0.48

Additional risk adjustments	1.5%	2.0%
Cost of equity	5.10%	7.00%

Tax rate	11.50%	13.60%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	4.50%

After-tax WACC	5.0%	6.8%


Selected WACC	5.9%

HREN.SW'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 HREN.SW:

cost_of_equity (6.05%) = risk_free_rate (1.65%) + equity_risk_premium (6.00%) * adjusted_beta (0.4) + risk_adjustments (1.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.