The WACC of Ontex Group NV (ONTEX.BR) is 6.0%.
| Range | Selected | |
| Cost of equity | 7.30% - 11.80% | 9.55% |
| Tax rate | 26.40% - 32.10% | 29.25% |
| Cost of debt | 4.10% - 4.60% | 4.35% |
| WACC | 5.0% - 7.0% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.75 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.30% | 11.80% |
| Tax rate | 26.40% | 32.10% |
| Debt/Equity ratio | 1.2 | 1.2 |
| Cost of debt | 4.10% | 4.60% |
| After-tax WACC | 5.0% | 7.0% |
| Selected WACC | 6.0% | |
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 ONTEX.BR:
cost_of_equity (9.55%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.75) + 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.