The WACC of IRCE SpA (IRC.MI) is 9.7%.
| Range | Selected | |
| Cost of equity | 14.70% - 20.40% | 17.55% |
| Tax rate | 33.90% - 34.70% | 34.30% |
| Cost of debt | 4.00% - 5.40% | 4.70% |
| WACC | 8.2% - 11.3% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.33 | 1.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.70% | 20.40% |
| Tax rate | 33.90% | 34.70% |
| Debt/Equity ratio | 1.18 | 1.18 |
| Cost of debt | 4.00% | 5.40% |
| After-tax WACC | 8.2% | 11.3% |
| Selected WACC | 9.7% | |
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 IRC.MI:
cost_of_equity (17.55%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (1.33) + 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.