The WACC of New Value AG (NEWN.SW) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.40% - 7.90% | 6.65% |
| Tax rate | 16.60% - 17.90% | 17.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.2% - 7.3% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 1.6% | 2.1% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.79 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.40% | 7.90% |
| Tax rate | 16.60% | 17.90% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.2% | 7.3% |
| Selected WACC | 6.2% | |
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 NEWN.SW:
cost_of_equity (6.65%) = risk_free_rate (1.85%) + equity_risk_premium (5.20%) * adjusted_beta (0.79) + 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.