ITM.L
ITM Power PLC
Price:  
58.90 
GBP
Volume:  
3,851,260.00
United Kingdom | Electrical Equipment
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ITM.L WACC - Weighted Average Cost of Capital

The WACC of ITM Power PLC (ITM.L) is 8.3%.

The Cost of Equity of ITM Power PLC (ITM.L) is 8.30%.
The Cost of Debt of ITM Power PLC (ITM.L) is 7.30%.

Range Selected
Cost of equity 6.60% - 10.00% 8.30%
Tax rate 0.10% - 0.10% 0.10%
Cost of debt 7.00% - 7.60% 7.30%
WACC 6.6% - 10.0% 8.3%
WACC

ITM.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.44 0.72
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 10.00%
Tax rate 0.10% 0.10%
Debt/Equity ratio 0.03 0.03
Cost of debt 7.00% 7.60%
After-tax WACC 6.6% 10.0%
Selected WACC 8.3%

ITM.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 ITM.L:

cost_of_equity (8.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.