LSC.L WACC - Weighted Average Cost of Capital

The WACC of London Security PLC (LSC.L) is 7.5%.

The Cost of Equity of London Security PLC (LSC.L) is 7.60%.

The Cost of Debt of London Security PLC (LSC.L) is 4.30%.

	Range	Selected
Cost of equity	6.50% - 8.70%	7.60%
Tax rate	26.10% - 26.40%	26.25%
Cost of debt	4.00% - 4.60%	4.30%
WACC	6.4% - 8.6%	7.5%

WACC

LSC.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.42	0.53

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	8.70%

Tax rate	26.10%	26.40%
Debt/Equity ratio	0.02	0.02
Cost of debt	4.00%	4.60%

After-tax WACC	6.4%	8.6%


Selected WACC	7.5%

LSC.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 LSC.L:

cost_of_equity (7.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.42) + 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.