LUMI.TA WACC - Weighted Average Cost of Capital

The WACC of Bank Leumi Le Israel BM (LUMI.TA) is 8.8%.

The Cost of Equity of Bank Leumi Le Israel BM (LUMI.TA) is 11.80%.

The Cost of Debt of Bank Leumi Le Israel BM (LUMI.TA) is 5.00%.

	Range	Selected
Cost of equity	10.50% - 13.10%	11.80%
Tax rate	34.40% - 35.20%	34.80%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.9% - 9.6%	8.8%

WACC

LUMI.TA WACC calculation

Category	Low	High

Long-term bond rate	4.8%	5.3%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.92	1.02

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.50%	13.10%

Tax rate	34.40%	35.20%
Debt/Equity ratio	0.55	0.55
Cost of debt	5.00%	5.00%

After-tax WACC	7.9%	9.6%


Selected WACC	8.8%

LUMI.TA'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 LUMI.TA:

cost_of_equity (11.80%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.92) + 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.