The WACC of Kolinpharma SpA (KIP.MI) is 6.0%.
| Range | Selected | |
| Cost of equity | 6.40% - 8.50% | 7.45% |
| Tax rate | 29.40% - 34.60% | 32.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.4% - 6.6% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.33 | 0.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.40% | 8.50% |
| Tax rate | 29.40% | 34.60% |
| Debt/Equity ratio | 0.55 | 0.55 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.4% | 6.6% |
| Selected WACC | 6.0% | |
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 KIP.MI:
cost_of_equity (7.45%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.33) + 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.