The WACC of Internet Gold Golden Lines Ltd (IGLDF) is 3.6%.
| Range | Selected | |
| Cost of equity | 17.90% - 58.70% | 38.30% |
| Tax rate | 30.10% - 40.40% | 35.25% |
| Cost of debt | 4.00% - 4.80% | 4.40% |
| WACC | 3.1% - 4.0% | 3.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3.06 | 9.61 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.90% | 58.70% |
| Tax rate | 30.10% | 40.40% |
| Debt/Equity ratio | 46.13 | 46.13 |
| Cost of debt | 4.00% | 4.80% |
| After-tax WACC | 3.1% | 4.0% |
| Selected WACC | 3.6% | |
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 IGLDF:
cost_of_equity (38.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3.06) + 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.