ICEAIR.IC WACC - Weighted Average Cost of Capital
The WACC of Icelandair Group hf (ICEAIR.IC) is 7.7%.
| Range | Selected | |
| Cost of equity | 10.5% - 14.1% | 12.3% |
| Tax rate | 19.1% - 29.0% | 24.05% |
| Cost of debt | 5.5% - 7.0% | 6.25% |
| WACC | 6.8% - 8.5% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.54 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.5% | 14.1% |
| Tax rate | 19.1% | 29.0% |
| Debt/Equity ratio | 1.55 | 1.55 |
| Cost of debt | 5.5% | 7.0% |
| After-tax WACC | 6.8% | 8.5% |
| Selected WACC | 7.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| ICEAIR.IC | Icelandair Group hf | 1.55 | 0.75 | 0.33 |
| AF.PA | Air France KLM SA | 5.03 | 1.59 | 0.31 |
| ENT.WA | Enter Air SA | 1.56 | 0.42 | 0.19 |
| EZJ.L | Easyjet PLC | 0.82 | 1.08 | 0.65 |
| GMAA.L | Gama Aviation PLC | 1.04 | -0.72 | -0.39 |
| IAG.L | International Consolidated Airlines Group SA | 0.93 | 1.43 | 0.82 |
| LHA.DE | Deutsche Lufthansa AG | 1.61 | 1.37 | 0.6 |
| NAS.OL | Norwegian Air Shuttle ASA | 0.79 | -0.33 | -0.2 |
| THYAO.IS | Turk Hava Yollari AO | 10.37 | 1.25 | 0.13 |
| SAVE | Spirit Airlines Inc | 76.94 | 0.81 | 0.01 |
| Low | High | |
| Unlevered beta | 0.16 | 0.32 |
| Relevered beta | 0.31 | 0.73 |
| Adjusted relevered beta | 0.54 | 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 (12.30%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.54) + 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.