The WACC of JPmorgan Russian Securities PLC (JRS.L) is 9.1%.
| Range | Selected | |
| Cost of equity | 12.00% - 14.50% | 13.25% |
| Tax rate | 1.40% - 2.10% | 1.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.5% - 9.7% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 4.4% | 4.9% |
| Equity market risk premium | 6.4% | 7.4% |
| Adjusted beta | 1.18 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 14.50% |
| Tax rate | 1.40% | 2.10% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.5% | 9.7% |
| Selected WACC | 9.1% | |
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 JRS.L:
cost_of_equity (13.25%) = risk_free_rate (4.65%) + equity_risk_premium (6.90%) * adjusted_beta (1.18) + 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.