The WACC of paragon GmbH & Co KgaA (PGN.DE) is 13.3%.
| Range | Selected | |
| Cost of equity | 16.10% - 30.00% | 23.05% |
| Tax rate | 7.50% - 12.90% | 10.20% |
| Cost of debt | 7.10% - 19.80% | 13.45% |
| WACC | 7.7% - 18.8% | 13.3% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 2.62 | 4.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.10% | 30.00% |
| Tax rate | 7.50% | 12.90% |
| Debt/Equity ratio | 7.26 | 7.26 |
| Cost of debt | 7.10% | 19.80% |
| After-tax WACC | 7.7% | 18.8% |
| Selected WACC | 13.3% | |
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 PGN.DE:
cost_of_equity (23.05%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (2.62) + 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.