REDD.L
Redde Northgate PLC
Price:  
369.00 
GBP
Volume:  
266,435.00
United Kingdom | Road & Rail
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REDD.L WACC - Weighted Average Cost of Capital

The WACC of Redde Northgate PLC (REDD.L) is 7.4%.

The Cost of Equity of Redde Northgate PLC (REDD.L) is 10.55%.
The Cost of Debt of Redde Northgate PLC (REDD.L) is 4.25%.

Range Selected
Cost of equity 8.90% - 12.20% 10.55%
Tax rate 18.20% - 22.40% 20.30%
Cost of debt 4.00% - 4.50% 4.25%
WACC 6.5% - 8.4% 7.4%
WACC

REDD.L WACC calculation

Category Low High
Long-term bond rate 3.7% 4.2%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.87 1.06
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.90% 12.20%
Tax rate 18.20% 22.40%
Debt/Equity ratio 0.78 0.78
Cost of debt 4.00% 4.50%
After-tax WACC 6.5% 8.4%
Selected WACC 7.4%

REDD.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 REDD.L:

cost_of_equity (10.55%) = risk_free_rate (3.95%) + equity_risk_premium (6.50%) * adjusted_beta (0.87) + 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.