PURP.L
Purplebricks Group PLC
Price:  
0.31 
GBP
Volume:  
16,646,900.00
United Kingdom | Real Estate Management & Development
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PURP.L WACC - Weighted Average Cost of Capital

The WACC of Purplebricks Group PLC (PURP.L) is 5.7%.

The Cost of Equity of Purplebricks Group PLC (PURP.L) is 13.70%.
The Cost of Debt of Purplebricks Group PLC (PURP.L) is 5.00%.

Range Selected
Cost of equity 8.40% - 19.00% 13.70%
Tax rate 9.90% - 14.80% 12.35%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.1% - 6.3% 5.7%
WACC

PURP.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.73 2
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 19.00%
Tax rate 9.90% 14.80%
Debt/Equity ratio 6.1 6.1
Cost of debt 5.00% 5.00%
After-tax WACC 5.1% 6.3%
Selected WACC 5.7%

PURP.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 PURP.L:

cost_of_equity (13.70%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.73) + 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.