PON1V.HE WACC - Weighted Average Cost of Capital

The WACC of Ponsse Oyj (PON1V.HE) is 7.1%.

The Cost of Equity of Ponsse Oyj (PON1V.HE) is 7.50%.

The Cost of Debt of Ponsse Oyj (PON1V.HE) is 4.25%.

	Range	Selected
Cost of equity	5.90% - 9.10%	7.50%
Tax rate	24.50% - 28.20%	26.35%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.7% - 8.6%	7.1%

WACC

PON1V.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.56	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	9.10%

Tax rate	24.50%	28.20%
Debt/Equity ratio	0.1	0.1
Cost of debt	4.00%	4.50%

After-tax WACC	5.7%	8.6%


Selected WACC	7.1%

PON1V.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 PON1V.HE:

cost_of_equity (7.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.56) + 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.