HSL.L WACC - Weighted Average Cost of Capital

The WACC of Henderson Smaller Companies Investment Trust PLC (HSL.L) is 10.5%.

The Cost of Equity of Henderson Smaller Companies Investment Trust PLC (HSL.L) is 11.70%.

The Cost of Debt of Henderson Smaller Companies Investment Trust PLC (HSL.L) is 4.30%.

	Range	Selected
Cost of equity	10.20% - 13.20%	11.70%
Tax rate	-% - -%	-%
Cost of debt	4.00% - 4.60%	4.30%
WACC	9.2% - 11.8%	10.5%

WACC

HSL.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.04	1.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.20%	13.20%

Tax rate	-%	-%
Debt/Equity ratio	0.19	0.19
Cost of debt	4.00%	4.60%

After-tax WACC	9.2%	11.8%


Selected WACC	10.5%

HSL.L'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 HSL.L:

cost_of_equity (11.70%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.04) + 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.