IAG.L
International Consolidated Airlines Group SA
Price:  
374.10 
GBP
Volume:  
29,363,684.00
United Kingdom | Airlines
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IAG.L WACC - Weighted Average Cost of Capital

The WACC of International Consolidated Airlines Group SA (IAG.L) is 7.4%.

The Cost of Equity of International Consolidated Airlines Group SA (IAG.L) is 10.15%.
The Cost of Debt of International Consolidated Airlines Group SA (IAG.L) is 4.85%.

Range Selected
Cost of equity 8.40% - 11.90% 10.15%
Tax rate 12.40% - 14.40% 13.40%
Cost of debt 4.50% - 5.20% 4.85%
WACC 6.4% - 8.4% 7.4%
WACC

IAG.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.75 0.99
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 11.90%
Tax rate 12.40% 14.40%
Debt/Equity ratio 0.86 0.86
Cost of debt 4.50% 5.20%
After-tax WACC 6.4% 8.4%
Selected WACC 7.4%

IAG.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 IAG.L:

cost_of_equity (10.15%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.75) + 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.