The WACC of Outokumpu Oyj (OUT1V.HE) is 7.7%.
| Range | Selected | |
| Cost of equity | 6.70% - 10.60% | 8.65% |
| Tax rate | 16.50% - 18.90% | 17.70% |
| Cost of debt | 4.00% - 7.30% | 5.65% |
| WACC | 5.9% - 9.5% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 0.7 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 10.60% |
| Tax rate | 16.50% | 18.90% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 4.00% | 7.30% |
| After-tax WACC | 5.9% | 9.5% |
| Selected WACC | 7.7% | |
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 OUT1V.HE:
cost_of_equity (8.65%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.7) + 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.