LONN.SW WACC - Weighted Average Cost of Capital

The WACC of Lonza Group AG (LONN.SW) is 5.9%.

The Cost of Equity of Lonza Group AG (LONN.SW) is 6.20%.

The Cost of Debt of Lonza Group AG (LONN.SW) is 4.25%.

	Range	Selected
Cost of equity	4.90% - 7.50%	6.20%
Tax rate	13.70% - 15.70%	14.70%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.7% - 7.1%	5.9%

WACC

LONN.SW WACC calculation

Category	Low	High

Long-term bond rate	1.0%	1.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.77	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.90%	7.50%

Tax rate	13.70%	15.70%
Debt/Equity ratio	0.12	0.12
Cost of debt	4.00%	4.50%

After-tax WACC	4.7%	7.1%


Selected WACC	5.9%

LONN.SW'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 LONN.SW:

cost_of_equity (6.20%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.77) + 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.