The WACC of Lipetskaya Energosbytovaya Kompaniya OAO (LPSB.ME) is 20.8%.
| Range | Selected | |
| Cost of equity | 20.00% - 21.60% | 20.80% |
| Tax rate | 20.00% - 22.70% | 21.35% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 20.0% - 21.6% | 20.8% |
| Category | Low | High |
| Long-term bond rate | 15.8% | 16.3% |
| Equity market risk premium | 11.7% | 12.7% |
| Adjusted beta | 0.36 | 0.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.00% | 21.60% |
| Tax rate | 20.00% | 22.70% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 20.0% | 21.6% |
| Selected WACC | 20.8% | |
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 LPSB.ME:
cost_of_equity (20.80%) = risk_free_rate (16.05%) + equity_risk_premium (12.20%) * adjusted_beta (0.36) + 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.