The WACC of Orange Belgium SA (OBEL.BR) is 9.1%.
| Range | Selected | |
| Cost of equity | 5.00% - 6.70% | 5.85% |
| Tax rate | 25.00% - 25.00% | 25.00% |
| Cost of debt | 5.70% - 22.90% | 14.30% |
| WACC | 4.5% - 13.8% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.27 | 0.34 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.00% | 6.70% |
| Tax rate | 25.00% | 25.00% |
| Debt/Equity ratio | 2.1 | 2.1 |
| Cost of debt | 5.70% | 22.90% |
| After-tax WACC | 4.5% | 13.8% |
| Selected WACC | 9.1% | |
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 OBEL.BR:
cost_of_equity (5.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.27) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.