The WACC of Panevezio Statybos Trestas AB (PTR1L.VS) is 7.6%.
| Range | Selected | |
| Cost of equity | 10.10% - 14.00% | 12.05% |
| Tax rate | 4.20% - 9.80% | 7.00% |
| Cost of debt | 5.00% - 7.00% | 6.00% |
| WACC | 6.5% - 8.7% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 1.06 | 1.31 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.10% | 14.00% |
| Tax rate | 4.20% | 9.80% |
| Debt/Equity ratio | 2.24 | 2.24 |
| Cost of debt | 5.00% | 7.00% |
| After-tax WACC | 6.5% | 8.7% |
| Selected WACC | 7.6% | |
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 PTR1L.VS:
cost_of_equity (12.05%) = risk_free_rate (3.65%) + equity_risk_premium (6.80%) * adjusted_beta (1.06) + 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.