The WACC of Idorsia Ltd (IDIA.SW) is 7.2%.
| Range | Selected | |
| Cost of equity | 5.40% - 17.90% | 11.65% |
| Tax rate | 0.60% - 0.90% | 0.75% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.4% - 10.0% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.67 | 2.44 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.40% | 17.90% |
| Tax rate | 0.60% | 0.90% |
| Debt/Equity ratio | 2.54 | 2.54 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.4% | 10.0% |
| Selected WACC | 7.2% | |
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 IDIA.SW:
cost_of_equity (11.65%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.67) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.