The WACC of Life Settlement Assets PLC (LSAA.L) is 6.9%.
Range | Selected | |
Cost of equity | 7.3% - 10.3% | 8.8% |
Tax rate | 0.2% - 0.5% | 0.35% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.1% - 7.7% | 6.9% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 5.5% | 6.5% |
Adjusted beta | 0.6 | 0.82 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.3% | 10.3% |
Tax rate | 0.2% | 0.5% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.1% | 7.7% |
Selected WACC | 6.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LSAA.L | Life Settlement Assets PLC | 1.06 | -0.03 | -0.01 |
ALI.WA | Altus Towarzystwo Funduszy Inwestycyjnych SA | 0.03 | 0.41 | 0.39 |
APQ.L | APQ Global Ltd | 27.33 | 1.48 | 0.05 |
ATRUST.AT | Alpha Trust Mutual Fund and Alternative Investment Fund Management SA | 0.05 | -0.19 | -0.18 |
COP.MI | Copernico SIM SpA | 0.02 | 0.63 | 0.62 |
CSR.WA | Caspar Asset Management SA | 0.1 | -0.68 | -0.62 |
EAB.HE | EAB Group Oyj | 0.17 | 0.71 | 0.61 |
SCM.MI | Solutions Capital Management SIM SpA | 0.24 | 0.44 | 0.35 |
SHG.WA | Starhedge SA | 0.32 | 0.54 | 0.41 |
STM.L | STM Group PLC | 0.16 | -0.46 | -0.4 |
TAVI.L | Tavistock Investments PLC | 0.16 | 0.34 | 0.3 |
Low | High | |
Unlevered beta | 0.05 | 0.35 |
Relevered beta | 0.4 | 0.73 |
Adjusted relevered beta | 0.6 | 0.82 |
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 LSAA.L:
cost_of_equity (8.80%) = risk_free_rate (4.25%) + equity_risk_premium (6.00%) * adjusted_beta (0.6) + 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.