The WACC of InVision AG (IVX.DE) is 5.8%.
| Range | Selected | |
| Cost of equity | 5.50% - 8.90% | 7.20% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.4% - 7.2% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.36 | 0.69 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.50% | 8.90% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 0.69 | 0.69 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.4% | 7.2% |
| Selected WACC | 5.8% | |
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 IVX.DE:
cost_of_equity (7.20%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (0.36) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.