LUG.WA WACC - Weighted Average Cost of Capital

The WACC of Lug SA (LUG.WA) is 7.3%.

The Cost of Equity of Lug SA (LUG.WA) is 10.75%.

The Cost of Debt of Lug SA (LUG.WA) is 6.50%.

	Range	Selected
Cost of equity	9.00% - 12.50%	10.75%
Tax rate	14.10% - 18.10%	16.10%
Cost of debt	6.00% - 7.00%	6.50%
WACC	6.5% - 8.1%	7.3%

WACC

LUG.WA WACC calculation

Category	Low	High

Long-term bond rate	5.5%	6.0%
Equity market risk premium	6.3%	7.3%
Adjusted beta	0.55	0.82

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	12.50%

Tax rate	14.10%	18.10%
Debt/Equity ratio	1.9	1.9
Cost of debt	6.00%	7.00%

After-tax WACC	6.5%	8.1%


Selected WACC	7.3%

LUG.WA'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 LUG.WA:

cost_of_equity (10.75%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.55) + 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.