LUVE.MI WACC - Weighted Average Cost of Capital

The WACC of Lu-Ve SpA (LUVE.MI) is 7.7%.

The Cost of Equity of Lu-Ve SpA (LUVE.MI) is 10.20%.

The Cost of Debt of Lu-Ve SpA (LUVE.MI) is 4.25%.

	Range	Selected
Cost of equity	8.60% - 11.80%	10.20%
Tax rate	15.60% - 17.80%	16.70%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.7% - 8.8%	7.7%

WACC

LUVE.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.59	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.60%	11.80%

Tax rate	15.60%	17.80%
Debt/Equity ratio	0.58	0.58
Cost of debt	4.00%	4.50%

After-tax WACC	6.7%	8.8%


Selected WACC	7.7%

LUVE.MI'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 LUVE.MI:

cost_of_equity (10.20%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.59) + 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.