ILK2S.HE WACC - Weighted Average Cost of Capital

The WACC of Ilkka Yhtyma Oyj (ILK2S.HE) is 6.7%.

The Cost of Equity of Ilkka Yhtyma Oyj (ILK2S.HE) is 6.60%.

The Cost of Debt of Ilkka Yhtyma Oyj (ILK2S.HE) is 16.90%.

	Range	Selected
Cost of equity	4.90% - 8.30%	6.60%
Tax rate	2.70% - 4.00%	3.35%
Cost of debt	4.00% - 29.80%	16.90%
WACC	4.8% - 8.6%	6.7%

WACC

ILK2S.HE WACC calculation

Category	Low	High

Long-term bond rate	0.3%	0.8%
Equity market risk premium	5.6%	6.6%
Adjusted beta	0.46	0.75

Additional risk adjustments	2.0%	2.5%
Cost of equity	4.90%	8.30%

Tax rate	2.70%	4.00%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.00%	29.80%

After-tax WACC	4.8%	8.6%


Selected WACC	6.7%

ILK2S.HE'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 ILK2S.HE:

cost_of_equity (6.60%) = risk_free_rate (0.55%) + equity_risk_premium (6.10%) * adjusted_beta (0.46) + risk_adjustments (2.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.