The WACC of Sequa Petroleum NV (MLSEQ.PA) is 5.5%.
| Range | Selected | |
| Cost of equity | 3.20% - 108.80% | 56.00% |
| Tax rate | 0.20% - 0.30% | 0.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 6.0% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.0% | 3.5% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | -12.08 | 5.03 |
| Additional risk adjustments | 70.5% | 71.0% |
| Cost of equity | 3.20% | 108.80% |
| Tax rate | 0.20% | 0.30% |
| Debt/Equity ratio | 98.65 | 98.65 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 6.0% |
| Selected WACC | 5.5% | |
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 MLSEQ.PA:
cost_of_equity (56.00%) = risk_free_rate (3.25%) + equity_risk_premium (6.30%) * adjusted_beta (-12.08) + risk_adjustments (70.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.