LGEN.L
Legal & General Group PLC
Price:  
237.80 
GBP
Volume:  
27,719,104.00
United Kingdom | Insurance
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LGEN.L WACC - Weighted Average Cost of Capital

The WACC of Legal & General Group PLC (LGEN.L) is 8.5%.

The Cost of Equity of Legal & General Group PLC (LGEN.L) is 10.50%.
The Cost of Debt of Legal & General Group PLC (LGEN.L) is 5.00%.

Range Selected
Cost of equity 8.20% - 12.80% 10.50%
Tax rate 20.30% - 23.50% 21.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.9% - 10.1% 8.5%
WACC

LGEN.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.7 1.12
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 12.80%
Tax rate 20.30% 23.50%
Debt/Equity ratio 0.44 0.44
Cost of debt 5.00% 5.00%
After-tax WACC 6.9% 10.1%
Selected WACC 8.5%

LGEN.L'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 LGEN.L:

cost_of_equity (10.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.7) + 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.