The WACC of Petropavlovsk PLC (POG.L) is 7.4%.
| Range | Selected | |
| Cost of equity | 9.00% - 19.50% | 14.25% |
| Tax rate | 19.00% - 19.00% | 19.00% |
| Cost of debt | 7.00% - 9.70% | 8.35% |
| WACC | 5.9% - 8.8% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.13 | 2.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.00% | 19.50% |
| Tax rate | 19.00% | 19.00% |
| Debt/Equity ratio | 11.14 | 11.14 |
| Cost of debt | 7.00% | 9.70% |
| After-tax WACC | 5.9% | 8.8% |
| Selected WACC | 7.4% | |
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 POG.L:
cost_of_equity (14.25%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.13) + 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.