OVARO.HE WACC - Weighted Average Cost of Capital

The WACC of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 5.1%.

The Cost of Equity of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 5.35%.

The Cost of Debt of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 5.15%.

	Range	Selected
Cost of equity	4.60% - 6.10%	5.35%
Tax rate	7.30% - 12.80%	10.05%
Cost of debt	4.00% - 6.30%	5.15%
WACC	4.3% - 5.9%	5.1%

WACC

OVARO.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.33	0.35

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.60%	6.10%

Tax rate	7.30%	12.80%
Debt/Equity ratio	0.48	0.48
Cost of debt	4.00%	6.30%

After-tax WACC	4.3%	5.9%


Selected WACC	5.1%

OVARO.HE'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 OVARO.HE:

cost_of_equity (5.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.33) + 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.