The WACC of Pioneer Property Group ASA (PPG.OL) is 7.7%.
| Range | Selected | |
| Cost of equity | 5.00% - 6.50% | 5.75% |
| Tax rate | 15.80% - 19.20% | 17.50% |
| Cost of debt | 11.80% - 11.80% | 11.80% |
| WACC | 7.4% - 8.0% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.33 | 0.36 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.00% | 6.50% |
| Tax rate | 15.80% | 19.20% |
| Debt/Equity ratio | 0.95 | 0.95 |
| Cost of debt | 11.80% | 11.80% |
| After-tax WACC | 7.4% | 8.0% |
| Selected WACC | 7.7% | |
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 PPG.OL:
cost_of_equity (5.75%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.33) + 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.