NESTE.HE WACC - Weighted Average Cost of Capital

The WACC of Neste Oyj (NESTE.HE) is 6.4%.

The Cost of Equity of Neste Oyj (NESTE.HE) is 7.20%.

The Cost of Debt of Neste Oyj (NESTE.HE) is 5.50%.

	Range	Selected
Cost of equity	5.70% - 8.70%	7.20%
Tax rate	9.80% - 12.70%	11.25%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.0% - 7.8%	6.4%

WACC

NESTE.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.53	0.74

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	8.70%

Tax rate	9.80%	12.70%
Debt/Equity ratio	0.53	0.53
Cost of debt	4.00%	7.00%

After-tax WACC	5.0%	7.8%


Selected WACC	6.4%

NESTE.HE'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 NESTE.HE:

cost_of_equity (7.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.53) + 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.