PHR.LS WACC - Weighted Average Cost of Capital

The WACC of Pharol SGPS SA (PHR.LS) is 7.8%.

The Cost of Equity of Pharol SGPS SA (PHR.LS) is 7.80%.

The Cost of Debt of Pharol SGPS SA (PHR.LS) is 5.00%.

	Range	Selected
Cost of equity	6.90% - 8.70%	7.80%
Tax rate	1.30% - 16.00%	8.65%
Cost of debt	5.00% - 5.00%	5.00%
WACC	6.9% - 8.7%	7.8%

WACC

PHR.LS WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.58	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	8.70%

Tax rate	1.30%	16.00%
Debt/Equity ratio	0	0
Cost of debt	5.00%	5.00%

After-tax WACC	6.9%	8.7%


Selected WACC	7.8%

PHR.LS'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 PHR.LS:

cost_of_equity (7.80%) = risk_free_rate (3.15%) + equity_risk_premium (7.35%) * adjusted_beta (0.58) + 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.