The WACC of Lenzing AG (LNZ.VI) is 11.4%.
| Range | Selected | |
| Cost of equity | 11.60% - 15.30% | 13.45% |
| Tax rate | 25.00% - 25.00% | 25.00% |
| Cost of debt | 5.00% - 22.80% | 13.90% |
| WACC | 6.2% - 16.5% | 11.4% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 1.55 | 1.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.60% | 15.30% |
| Tax rate | 25.00% | 25.00% |
| Debt/Equity ratio | 2.21 | 2.21 |
| Cost of debt | 5.00% | 22.80% |
| After-tax WACC | 6.2% | 16.5% |
| Selected WACC | 11.4% | |
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 LNZ.VI:
cost_of_equity (13.45%) = risk_free_rate (3.05%) + equity_risk_premium (6.20%) * adjusted_beta (1.55) + 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.