PIHLIS.HE WACC - Weighted Average Cost of Capital

The WACC of Pihlajalinna Oyj (PIHLIS.HE) is 4.9%.

The Cost of Equity of Pihlajalinna Oyj (PIHLIS.HE) is 7.35%.

The Cost of Debt of Pihlajalinna Oyj (PIHLIS.HE) is 4.25%.

	Range	Selected
Cost of equity	6.10% - 8.60%	7.35%
Tax rate	29.90% - 38.60%	34.25%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.3% - 5.4%	4.9%

WACC

PIHLIS.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.6	0.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	8.60%

Tax rate	29.90%	38.60%
Debt/Equity ratio	1.21	1.21
Cost of debt	4.00%	4.50%

After-tax WACC	4.3%	5.4%


Selected WACC	4.9%

PIHLIS.HE'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 PIHLIS.HE:

cost_of_equity (7.35%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.6) + 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.