PFD.L WACC - Weighted Average Cost of Capital

The WACC of Premier Foods PLC (PFD.L) is 7.4%.

The Cost of Equity of Premier Foods PLC (PFD.L) is 7.95%.

The Cost of Debt of Premier Foods PLC (PFD.L) is 5.85%.

	Range	Selected
Cost of equity	6.90% - 9.00%	7.95%
Tax rate	20.90% - 23.30%	22.10%
Cost of debt	4.90% - 6.80%	5.85%
WACC	6.4% - 8.4%	7.4%

WACC

PFD.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.48	0.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	9.00%

Tax rate	20.90%	23.30%
Debt/Equity ratio	0.18	0.18
Cost of debt	4.90%	6.80%

After-tax WACC	6.4%	8.4%


Selected WACC	7.4%

PFD.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 PFD.L:

cost_of_equity (7.95%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.48) + 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.