PHIA.AS WACC - Weighted Average Cost of Capital

The WACC of Koninklijke Philips NV (PHIA.AS) is 7.9%.

The Cost of Equity of Koninklijke Philips NV (PHIA.AS) is 9.15%.

The Cost of Debt of Koninklijke Philips NV (PHIA.AS) is 5.50%.

	Range	Selected
Cost of equity	7.90% - 10.40%	9.15%
Tax rate	17.70% - 21.70%	19.70%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.7% - 9.1%	7.9%

WACC

PHIA.AS WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	5.1%	6.1%
Adjusted beta	1.05	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.40%

Tax rate	17.70%	21.70%
Debt/Equity ratio	0.36	0.36
Cost of debt	4.00%	7.00%

After-tax WACC	6.7%	9.1%


Selected WACC	7.9%

PHIA.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 PHIA.AS:

cost_of_equity (9.15%) = risk_free_rate (2.85%) + equity_risk_premium (5.60%) * adjusted_beta (1.05) + 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.