The WACC of Schiehallion Fund Ltd (MNTN.L) is 17.8%.
| Range | Selected | |
| Cost of equity | 29.10% - 34.70% | 31.90% |
| Tax rate | 19.00% - 19.00% | 19.00% |
| Cost of debt | 4.60% - 4.60% | 4.60% |
| WACC | 16.4% - 19.2% | 17.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 4.59 | 4.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 29.10% | 34.70% |
| Tax rate | 19.00% | 19.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.60% | 4.60% |
| After-tax WACC | 16.4% | 19.2% |
| Selected WACC | 17.8% | |
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 MNTN.L:
cost_of_equity (31.90%) = risk_free_rate (4.25%) + equity_risk_premium (6.00%) * adjusted_beta (4.59) + 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.