RE.L WACC - Weighted Average Cost of Capital

The WACC of R.E.A Holdings PLC (RE.L) is 6.7%.

The Cost of Equity of R.E.A Holdings PLC (RE.L) is 14.80%.

The Cost of Debt of R.E.A Holdings PLC (RE.L) is 6.90%.

	Range	Selected
Cost of equity	11.60% - 18.00%	14.80%
Tax rate	27.60% - 34.70%	31.15%
Cost of debt	6.20% - 7.60%	6.90%
WACC	5.9% - 7.5%	6.7%

WACC

RE.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.27	1.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	18.00%

Tax rate	27.60%	34.70%
Debt/Equity ratio	4.15	4.15
Cost of debt	6.20%	7.60%

After-tax WACC	5.9%	7.5%


Selected WACC	6.7%

RE.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 RE.L:

cost_of_equity (14.80%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.27) + 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.