IIT.L WACC - Weighted Average Cost of Capital
The WACC of Independent Investment Trust PLC (IIT.L) is 9.0%.
| Range | Selected | |
| Cost of equity | 11.2% - 14.8% | 13% |
| Tax rate | 0.0% - 0.0% | 0% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 8.1% - 9.9% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.55 | 1.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.2% | 14.8% |
| Tax rate | 0.0% | 0.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 8.1% | 9.9% |
| Selected WACC | 9.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IIT.L | Independent Investment Trust PLC | 0.86 | 1.12 | 0.6 |
| ADIG.L | Aberdeen Diversified Income and Growth Trust PLC | 1.06 | 0.62 | 0.3 |
| AUGM.L | Augmentum Fintech PLC | 0 | 1.43 | 1.42 |
| HINT.L | Henderson International Income Trust PLC | 0.07 | 1.01 | 0.94 |
| IAT.L | Invesco Asia Trust PLC | 0.01 | 3.55 | 3.51 |
| JMI.L | JPmorgan Smaller Companies Investment Trust PLC | 0.12 | 1.68 | 1.5 |
| JPEI.L | Jpmorgan Elect PLC | 0.02 | 1.15 | 1.13 |
| JSGI.L | JPMorgan Japan Small Cap Growth & Income PLC | 0.1 | 0.58 | 0.53 |
| MTE.L | Montanaro European Smaller Companies Trust PLC | 0.03 | 1.22 | 1.18 |
| MTU.L | Montanaro UK Smaller Companies Investment Trust PLC | 0.11 | 1.16 | 1.05 |
| SCP.L | Schroder UK Mid Cap Fund PLC | 0.12 | 1.73 | 1.54 |
| Low | High | |
| Unlevered beta | 1.05 | 1.18 |
| Relevered beta | 1.82 | 2.07 |
| Adjusted relevered beta | 1.55 | 1.72 |
IIT.L'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 IIT.L:
cost_of_equity (13.00%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.55) + 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.