PSH.AS WACC - Weighted Average Cost of Capital

The WACC of Pershing Square Holdings Ltd (PSH.AS) is 7.9%.

The Cost of Equity of Pershing Square Holdings Ltd (PSH.AS) is 8.80%.

The Cost of Debt of Pershing Square Holdings Ltd (PSH.AS) is 4.25%.

	Range	Selected
Cost of equity	7.40% - 10.20%	8.80%
Tax rate	2.00% - 2.40%	2.20%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.7% - 9.0%	7.9%

WACC

PSH.AS WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.05	1.18

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	10.20%

Tax rate	2.00%	2.40%
Debt/Equity ratio	0.25	0.25
Cost of debt	4.00%	4.50%

After-tax WACC	6.7%	9.0%


Selected WACC	7.9%

PSH.AS'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 PSH.AS:

cost_of_equity (8.80%) = risk_free_rate (2.85%) + equity_risk_premium (5.10%) * adjusted_beta (1.05) + 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.