The WACC of Oasmia Pharmaceutical AB (OASM.ST) is 7.3%.
| Range | Selected | |
| Cost of equity | 5.20% - 9.50% | 7.35% |
| Tax rate | -% - 7.80% | 3.90% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 5.3% - 9.3% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 0.6% | 1.1% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.49 | 0.94 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 5.20% | 9.50% |
| Tax rate | -% | 7.80% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 5.3% | 9.3% |
| Selected WACC | 7.3% | |
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 OASM.ST:
cost_of_equity (7.35%) = risk_free_rate (0.85%) + equity_risk_premium (5.70%) * adjusted_beta (0.49) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.