The WACC of Zespol Elektrocieplowni Wroclawskich Kogeneracja SA (KGN.WA) is 8.5%.
| Range | Selected | |
| Cost of equity | 9.40% - 11.50% | 10.45% |
| Tax rate | 20.00% - 20.20% | 20.10% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.8% - 9.2% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.61 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.40% | 11.50% |
| Tax rate | 20.00% | 20.20% |
| Debt/Equity ratio | 0.43 | 0.43 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.8% | 9.2% |
| Selected WACC | 8.5% | |
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 KGN.WA:
cost_of_equity (10.45%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.61) + 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.