The WACC of Iceland Seafood International hf (ICESEA.IC) is 8.1%.
| Range | Selected | |
| Cost of equity | 10.00% - 12.00% | 11.00% |
| Tax rate | 31.40% - 32.80% | 32.10% |
| Cost of debt | 5.20% - 10.70% | 7.95% |
| WACC | 6.6% - 9.5% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.46 | 0.54 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 12.00% |
| Tax rate | 31.40% | 32.80% |
| Debt/Equity ratio | 1.09 | 1.09 |
| Cost of debt | 5.20% | 10.70% |
| After-tax WACC | 6.6% | 9.5% |
| Selected WACC | 8.1% | |
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 ICESEA.IC:
cost_of_equity (11.00%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.46) + 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.