The WACC of Kaldalon hf (KALD.IC) is 8.9%.
| Range | Selected | |
| Cost of equity | 9.50% - 12.90% | 11.20% |
| Tax rate | 20.10% - 22.20% | 21.15% |
| Cost of debt | 6.50% - 12.30% | 9.40% |
| WACC | 6.9% - 10.9% | 8.9% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.38 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 12.90% |
| Tax rate | 20.10% | 22.20% |
| Debt/Equity ratio | 1.49 | 1.49 |
| Cost of debt | 6.50% | 12.30% |
| After-tax WACC | 6.9% | 10.9% |
| Selected WACC | 8.9% | |
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 KALD.IC:
cost_of_equity (11.20%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.38) + 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.