PHARM.AS WACC - Weighted Average Cost of Capital

The WACC of Pharming Group NV (PHARM.AS) is 6.0%.

The Cost of Equity of Pharming Group NV (PHARM.AS) is 6.30%.

The Cost of Debt of Pharming Group NV (PHARM.AS) is 5.10%.

	Range	Selected
Cost of equity	5.20% - 7.40%	6.30%
Tax rate	13.50% - 20.90%	17.20%
Cost of debt	4.00% - 6.20%	5.10%
WACC	5.0% - 7.0%	6.0%

WACC

PHARM.AS WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.43	0.54

Additional risk adjustments	0.5%	1.0%
Cost of equity	5.20%	7.40%

Tax rate	13.50%	20.90%
Debt/Equity ratio	0.16	0.16
Cost of debt	4.00%	6.20%

After-tax WACC	5.0%	7.0%


Selected WACC	6.0%

PHARM.AS'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 PHARM.AS:

cost_of_equity (6.30%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (0.43) + risk_adjustments (0.75%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.