The WACC of Perrot Duval Holding SA (PEDU.SW) is 5.9%.
| Range | Selected | |
| Cost of equity | 4.70% - 6.40% | 5.55% |
| Tax rate | 10.90% - 13.20% | 12.05% |
| Cost of debt | 5.00% - 21.00% | 13.00% |
| WACC | 4.7% - 7.1% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.45 | 0.49 |
| Additional risk adjustments | 1.5% | 2.0% |
| Cost of equity | 4.70% | 6.40% |
| Tax rate | 10.90% | 13.20% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 5.00% | 21.00% |
| After-tax WACC | 4.7% | 7.1% |
| Selected WACC | 5.9% | |
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 PEDU.SW:
cost_of_equity (5.55%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.45) + risk_adjustments (1.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.