OHL.MC WACC - Weighted Average Cost of Capital

The WACC of Obrascon Huarte Lain SA (OHL.MC) is 9.0%.

The Cost of Equity of Obrascon Huarte Lain SA (OHL.MC) is 14.10%.

The Cost of Debt of Obrascon Huarte Lain SA (OHL.MC) is 6.15%.

	Range	Selected
Cost of equity	11.50% - 16.70%	14.10%
Tax rate	2.80% - 9.30%	6.05%
Cost of debt	5.30% - 7.00%	6.15%
WACC	7.6% - 10.4%	9.0%

WACC

OHL.MC WACC calculation

Category	Low	High

Long-term bond rate	2.8%	3.3%
Equity market risk premium	6.3%	7.3%
Adjusted beta	1.39	1.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	16.70%

Tax rate	2.80%	9.30%
Debt/Equity ratio	1.59	1.59
Cost of debt	5.30%	7.00%

After-tax WACC	7.6%	10.4%


Selected WACC	9.0%

OHL.MC'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 OHL.MC:

cost_of_equity (14.10%) = risk_free_rate (3.05%) + equity_risk_premium (6.80%) * adjusted_beta (1.39) + 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.