The WACC of Immsi SpA (IMS.MI) is 7.1%.
| Range | Selected | |
| Cost of equity | 25.00% - 38.40% | 31.70% |
| Tax rate | 41.70% - 43.30% | 42.50% |
| Cost of debt | 5.20% - 7.30% | 6.25% |
| WACC | 5.8% - 8.5% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 2.56 | 3.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 25.00% | 38.40% |
| Tax rate | 41.70% | 43.30% |
| Debt/Equity ratio | 6.86 | 6.86 |
| Cost of debt | 5.20% | 7.30% |
| After-tax WACC | 5.8% | 8.5% |
| Selected WACC | 7.1% | |
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 IMS.MI:
cost_of_equity (31.70%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (2.56) + 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.