KVIKA.IC
Kvika banki hf
Price:  
18.25 
ISK
Volume:  
16,947,988
Iceland | Capital Markets

KVIKA.IC WACC - Weighted Average Cost of Capital

The WACC of Kvika banki hf (KVIKA.IC) is 9.2%.

The Cost of Equity of Kvika banki hf (KVIKA.IC) is 12.4%.
The Cost of Debt of Kvika banki hf (KVIKA.IC) is 5%.

RangeSelected
Cost of equity10.8% - 14.0%12.4%
Tax rate3.6% - 7.4%5.5%
Cost of debt5.0% - 5.0%5%
WACC8.3% - 10.1%9.2%
WACC

KVIKA.IC WACC calculation

CategoryLowHigh
Long-term bond rate7.1%7.6%
Equity market risk premium6.3%7.3%
Adjusted beta0.590.81
Additional risk adjustments0.0%0.5%
Cost of equity10.8%14.0%
Tax rate3.6%7.4%
Debt/Equity ratio
0.730.73
Cost of debt5.0%5.0%
After-tax WACC8.3%10.1%
Selected WACC9.2%

KVIKA.IC's CAPM model and how its cost of Equity is calculated

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 KVIKA.IC:

cost_of_equity (12.40%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.59) + 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.