IPO.L
IP Group PLC
Price:  
55.80 
GBP
Volume:  
1,385,509.00
United Kingdom | Capital Markets
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IPO.L WACC - Weighted Average Cost of Capital

The WACC of IP Group PLC (IPO.L) is 9.6%.

The Cost of Equity of IP Group PLC (IPO.L) is 11.20%.
The Cost of Debt of IP Group PLC (IPO.L) is 4.55%.

Range Selected
Cost of equity 9.30% - 13.10% 11.20%
Tax rate 0.30% - 0.70% 0.50%
Cost of debt 4.00% - 5.10% 4.55%
WACC 8.0% - 11.1% 9.6%
WACC

IPO.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.89 1.16
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.30% 13.10%
Tax rate 0.30% 0.70%
Debt/Equity ratio 0.32 0.32
Cost of debt 4.00% 5.10%
After-tax WACC 8.0% 11.1%
Selected WACC 9.6%

IPO.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 IPO.L:

cost_of_equity (11.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.89) + 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.