OVARO.HE WACC - Weighted Average Cost of Capital

The WACC of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 5.0%.

The Cost of Equity of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 5.45%.

The Cost of Debt of Ovaro Kiinteistosijoitus Oyj (OVARO.HE) is 4.45%.

	Range	Selected
Cost of equity	4.70% - 6.20%	5.45%
Tax rate	7.30% - 12.80%	10.05%
Cost of debt	4.00% - 4.90%	4.45%
WACC	4.4% - 5.6%	5.0%

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	0.34	0.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.70%	6.20%

Tax rate	7.30%	12.80%
Debt/Equity ratio	0.45	0.45
Cost of debt	4.00%	4.90%

After-tax WACC	4.4%	5.6%


Selected WACC	5.0%

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 (5.45%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.34) + 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.