The WACC of Paion AG (PA8.DE) is 5.3%.
| Range | Selected | |
| Cost of equity | 21.10% - 29.90% | 25.50% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.9% - 5.6% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 3.37 | 4.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 21.10% | 29.90% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 11.41 | 11.41 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.9% | 5.6% |
| Selected WACC | 5.3% | |
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 PA8.DE:
cost_of_equity (25.50%) = risk_free_rate (2.85%) + equity_risk_premium (6.00%) * adjusted_beta (3.37) + 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.