The WACC of Luzerner Kantonalbank AG (LUKN.SW) is 4.9%.
Range | Selected | |
Cost of equity | 5.5% - 10.3% | 7.9% |
Tax rate | 14.2% - 14.3% | 14.25% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.5% - 5.3% | 4.9% |
Category | Low | High |
Long-term bond rate | 1.1% | 1.6% |
Equity market risk premium | 4.7% | 5.7% |
Adjusted beta | 0.93 | 1.42 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.5% | 10.3% |
Tax rate | 14.2% | 14.3% |
Debt/Equity ratio | 4.67 | 4.67 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.5% | 5.3% |
Selected WACC | 4.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
LUKN.SW | Luzerner Kantonalbank AG | 4.67 | 0.28 | 0.06 |
BEKN.SW | Berner Kantonalbank AG | 4.5 | 0.13 | 0.03 |
CBG.L | Close Brothers Group PLC | 4.25 | 2.45 | 0.53 |
CE.MI | Credito Emiliano SpA | 2.9 | 0.94 | 0.27 |
LBK.MC | Liberbank SA | 9.62 | 1.26 | 0.14 |
LLBN.SW | Liechtensteinische Landesbank AG | 1.21 | 0.41 | 0.2 |
MONET.PR | Moneta Money Bank as | 0.28 | 1 | 0.81 |
NOFI.OL | Norwegian Finans Holding ASA | 0.35 | 1.76 | 1.35 |
SPOL.OL | Sparebank 1 Ostlandet | 1.93 | 0.51 | 0.19 |
SVEG.OL | Sparebanken Vest | 11.36 | 0.71 | 0.07 |
Low | High | |
Unlevered beta | 0.17 | 0.23 |
Relevered beta | 0.9 | 1.63 |
Adjusted relevered beta | 0.93 | 1.42 |
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 LUKN.SW:
cost_of_equity (7.90%) = risk_free_rate (1.35%) + equity_risk_premium (5.20%) * adjusted_beta (0.93) + 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.