The WACC of Jpmorgan European Investment Trust PLC (JETI.L) is 10.5%.
| Range | Selected | |
| Cost of equity | 12.40% - 16.20% | 14.30% |
| Tax rate | 1.60% - 1.90% | 1.75% |
| Cost of debt | 4.00% - 9.80% | 6.90% |
| WACC | 8.2% - 12.9% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.77 | 1.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.40% | 16.20% |
| Tax rate | 1.60% | 1.90% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.00% | 9.80% |
| After-tax WACC | 8.2% | 12.9% |
| Selected WACC | 10.5% | |
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 JETI.L:
cost_of_equity (14.30%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.77) + 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.