The WACC of O'Key Group SA (OKEY.L) is 5.9%.
| Range | Selected | |
| Cost of equity | 9.00% - 24.20% | 16.60% |
| Tax rate | 14.20% - 15.30% | 14.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.9% - 6.9% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 1.7% | 2.2% |
| Equity market risk premium | 4.8% | 5.8% |
| Adjusted beta | 1.52 | 3.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.00% | 24.20% |
| Tax rate | 14.20% | 15.30% |
| Debt/Equity ratio | 6.62 | 6.62 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.9% | 6.9% |
| Selected WACC | 5.9% | |
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 OKEY.L:
cost_of_equity (16.60%) = risk_free_rate (1.95%) + equity_risk_premium (5.30%) * adjusted_beta (1.52) + 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.