The WACC of Karelia Tobacco Company Inc SA (KARE.AT) is 8.7%.
| Range | Selected | |
| Cost of equity | 7.70% - 9.50% | 8.60% |
| Tax rate | 23.20% - 23.30% | 23.25% |
| Cost of debt | 4.00% - 291.60% | 147.80% |
| WACC | 7.7% - 9.8% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.5 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 9.50% |
| Tax rate | 23.20% | 23.30% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.00% | 291.60% |
| After-tax WACC | 7.7% | 9.8% |
| Selected WACC | 8.7% | |
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 KARE.AT:
cost_of_equity (8.60%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.5) + 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.