The WACC of Live Company Group PLC (LVCG.L) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.00% | 6.60% |
| Tax rate | 1.30% - 1.80% | 1.55% |
| Cost of debt | 7.00% - 7.70% | 7.35% |
| WACC | 6.2% - 7.7% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.12 | 0.36 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.20% | 8.00% |
| Tax rate | 1.30% | 1.80% |
| Debt/Equity ratio | 1.31 | 1.31 |
| Cost of debt | 7.00% | 7.70% |
| After-tax WACC | 6.2% | 7.7% |
| Selected WACC | 7.0% | |
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 LVCG.L:
cost_of_equity (6.60%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.12) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.