The WACC of International Personal Finance PLC (IPF.L) is 7.7%.
| Range | Selected | |
| Cost of equity | 6.20% - 7.90% | 7.05% |
| Tax rate | 32.50% - 37.10% | 34.80% |
| Cost of debt | 12.50% - 13.20% | 12.85% |
| WACC | 7.3% - 8.1% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.36 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 7.90% |
| Tax rate | 32.50% | 37.10% |
| Debt/Equity ratio | 1.02 | 1.02 |
| Cost of debt | 12.50% | 13.20% |
| After-tax WACC | 7.3% | 8.1% |
| Selected WACC | 7.7% | |
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 IPF.L:
cost_of_equity (7.05%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + 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.