The WACC of Origo hf (ORIGO.IC) is 11.5%.
| Range | Selected | |
| Cost of equity | 11.30% - 13.60% | 12.45% |
| Tax rate | 4.60% - 7.60% | 6.10% |
| Cost of debt | 8.20% - 8.80% | 8.50% |
| WACC | 10.6% - 12.4% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.67 | 0.75 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.30% | 13.60% |
| Tax rate | 4.60% | 7.60% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 8.20% | 8.80% |
| After-tax WACC | 10.6% | 12.4% |
| Selected WACC | 11.5% | |
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 ORIGO.IC:
cost_of_equity (12.45%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.67) + 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.