PDG.L WACC - Weighted Average Cost of Capital

The WACC of Pendragon PLC (PDG.L) is 10.7%.

The Cost of Equity of Pendragon PLC (PDG.L) is 11.80%.

The Cost of Debt of Pendragon PLC (PDG.L) is 10.50%.

	Range	Selected
Cost of equity	10.30% - 13.30%	11.80%
Tax rate	12.00% - 15.80%	13.90%
Cost of debt	8.10% - 12.90%	10.50%
WACC	9.0% - 12.3%	10.7%

WACC

PDG.L WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.09	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	13.30%

Tax rate	12.00%	15.80%
Debt/Equity ratio	0.67	0.67
Cost of debt	8.10%	12.90%

After-tax WACC	9.0%	12.3%


Selected WACC	10.7%

PDG.L'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 PDG.L:

cost_of_equity (11.80%) = risk_free_rate (3.95%) + equity_risk_premium (6.50%) * adjusted_beta (1.09) + 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.