PSN.L
Persimmon PLC
Price:  
1,092.00 
GBP
Volume:  
952,843.00
United Kingdom | Household Durables
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PSN.L WACC - Weighted Average Cost of Capital

The WACC of Persimmon PLC (PSN.L) is 7.9%.

The Cost of Equity of Persimmon PLC (PSN.L) is 12.35%.
The Cost of Debt of Persimmon PLC (PSN.L) is 4.60%.

Range Selected
Cost of equity 9.90% - 14.80% 12.35%
Tax rate 21.40% - 24.20% 22.80%
Cost of debt 4.60% - 4.60% 4.60%
WACC 6.7% - 9.1% 7.9%
WACC

PSN.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.99 1.41
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.90% 14.80%
Tax rate 21.40% 24.20%
Debt/Equity ratio 1 1
Cost of debt 4.60% 4.60%
After-tax WACC 6.7% 9.1%
Selected WACC 7.9%

PSN.L'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 PSN.L:

cost_of_equity (12.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.99) + 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.