The WACC of Kungsleden AB (KLED.ST) is 5.6%.
| Range | Selected | |
| Cost of equity | 5.80% - 8.70% | 7.25% |
| Tax rate | 21.30% - 22.00% | 21.65% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.7% - 6.5% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 0.6% | 1.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.98 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.80% | 8.70% |
| Tax rate | 21.30% | 22.00% |
| Debt/Equity ratio | 0.72 | 0.72 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.7% | 6.5% |
| Selected WACC | 5.6% | |
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 KLED.ST:
cost_of_equity (7.25%) = risk_free_rate (0.85%) + equity_risk_premium (5.70%) * adjusted_beta (0.98) + 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.