REC.MI WACC - Weighted Average Cost of Capital

The WACC of Recordati Industria Chimica e Farmaceutica SpA (REC.MI) is 10.2%.

The Cost of Equity of Recordati Industria Chimica e Farmaceutica SpA (REC.MI) is 11.75%.

The Cost of Debt of Recordati Industria Chimica e Farmaceutica SpA (REC.MI) is 4.30%.

	Range	Selected
Cost of equity	10.00% - 13.50%	11.75%
Tax rate	21.50% - 22.10%	21.80%
Cost of debt	4.00% - 4.60%	4.30%
WACC	8.7% - 11.7%	10.2%

WACC

REC.MI WACC calculation

Category	Low	High

Long-term bond rate	3.7%	4.2%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.77	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.00%	13.50%

Tax rate	21.50%	22.10%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.00%	4.60%

After-tax WACC	8.7%	11.7%


Selected WACC	10.2%

REC.MI'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 REC.MI:

cost_of_equity (11.75%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.77) + 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.