The WACC of Novavest Real Estate AG (NREN.SW) is 4.9%.
| Range | Selected | |
| Cost of equity | 5.00% - 7.20% | 6.10% |
| Tax rate | 17.70% - 19.20% | 18.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.5% - 5.3% | 4.9% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.49 | 0.61 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 5.00% | 7.20% |
| Tax rate | 17.70% | 19.20% |
| Debt/Equity ratio | 1.45 | 1.45 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.5% | 5.3% |
| Selected WACC | 4.9% | |
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 NREN.SW:
cost_of_equity (6.10%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.49) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.