The WACC of Raven Property Group Ltd (RAV.L) is 4.8%.
| Range | Selected | |
| Cost of equity | 13.20% - 30.10% | 21.65% |
| Tax rate | 33.80% - 48.20% | 41.00% |
| Cost of debt | 5.50% - 8.90% | 7.20% |
| WACC | 4.0% - 5.7% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.91 | 4.12 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.20% | 30.10% |
| Tax rate | 33.80% | 48.20% |
| Debt/Equity ratio | 23.2 | 23.2 |
| Cost of debt | 5.50% | 8.90% |
| After-tax WACC | 4.0% | 5.7% |
| Selected WACC | 4.8% | |
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 RAV.L:
cost_of_equity (21.65%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.91) + 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.