IPO.L WACC - Weighted Average Cost of Capital

The WACC of IP Group PLC (IPO.L) is 10.0%.

The Cost of Equity of IP Group PLC (IPO.L) is 11.95%.

The Cost of Debt of IP Group PLC (IPO.L) is 4.45%.

	Range	Selected
Cost of equity	9.30% - 14.60%	11.95%
Tax rate	0.30% - 0.70%	0.50%
Cost of debt	4.00% - 4.90%	4.45%
WACC	7.9% - 12.1%	10.0%

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	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	14.60%

Tax rate	0.30%	0.70%
Debt/Equity ratio	0.34	0.34
Cost of debt	4.00%	4.90%

After-tax WACC	7.9%	12.1%


Selected WACC	10.0%

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 (11.95%) = 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.