The WACC of Iffe Futura SA (IFF.MC) is 10.9%.
| Range | Selected | |
| Cost of equity | 6.20% - 7.70% | 6.95% |
| Tax rate | 29.50% - 30.60% | 30.05% |
| Cost of debt | 7.00% - 103.50% | 55.25% |
| WACC | 6.0% - 15.7% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 3.6% | 4.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.33 | 0.35 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 7.70% |
| Tax rate | 29.50% | 30.60% |
| Debt/Equity ratio | 0.14 | 0.14 |
| Cost of debt | 7.00% | 103.50% |
| After-tax WACC | 6.0% | 15.7% |
| Selected WACC | 10.9% | |
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 IFF.MC:
cost_of_equity (6.95%) = risk_free_rate (3.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.33) + 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.