The WACC of Brighton Pier Group PLC (PIER.L) is 11.6%.
| Range | Selected | |
| Cost of equity | 6.90% - 10.70% | 8.80% |
| Tax rate | 11.50% - 15.40% | 13.45% |
| Cost of debt | 4.00% - 24.00% | 14.00% |
| WACC | 3.9% - 19.4% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.49 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 10.70% |
| Tax rate | 11.50% | 15.40% |
| Debt/Equity ratio | 9.21 | 9.21 |
| Cost of debt | 4.00% | 24.00% |
| After-tax WACC | 3.9% | 19.4% |
| Selected WACC | 11.6% | |
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 PIER.L:
cost_of_equity (8.80%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.49) + 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.