ICEAIR.IC WACC - Weighted Average Cost of Capital
The WACC of Icelandair Group hf (ICEAIR.IC) is 7.3%.
| Range | Selected | |
| Cost of equity | 10.9% - 14.1% | 12.5% |
| Tax rate | 19.1% - 29.0% | 24.05% |
| Cost of debt | 5.5% - 7.0% | 6.25% |
| WACC | 6.6% - 8.0% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.6 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.9% | 14.1% |
| Tax rate | 19.1% | 29.0% |
| Debt/Equity ratio | 2.03 | 2.03 |
| Cost of debt | 5.5% | 7.0% |
| After-tax WACC | 6.6% | 8.0% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ICEAIR.IC | Icelandair Group hf | 2.03 | 0.95 | 0.36 |
| AF.PA | Air France KLM SA | 6.79 | 1.42 | 0.22 |
| EZJ.L | Easyjet PLC | 0.82 | 0.95 | 0.57 |
| GMAA.L | Gama Aviation PLC | 1.05 | -0.72 | -0.39 |
| IAG.L | International Consolidated Airlines Group SA | 1.07 | 1.42 | 0.76 |
| LHA.DE | Deutsche Lufthansa AG | 1.89 | 1.31 | 0.52 |
| NAS.OL | Norwegian Air Shuttle ASA | 1.08 | -0.08 | -0.04 |
| THYAO.IS | Turk Hava Yollari AO | 10.37 | 1.25 | 0.13 |
| AAL | American Airlines Group Inc | 4.16 | 0.94 | 0.22 |
| SAVE | Spirit Airlines Inc | 76.94 | 0.81 | 0.01 |
| Low | High | |
| Unlevered beta | 0.18 | 0.28 |
| Relevered beta | 0.4 | 0.73 |
| Adjusted relevered beta | 0.6 | 0.82 |
ICEAIR.IC'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 ICEAIR.IC:
cost_of_equity (12.50%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.6) + 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.