REITIR.IC WACC - Weighted Average Cost of Capital

The WACC of Reitir fasteignafelag hf (REITIR.IC) is 9.1%.

The Cost of Equity of Reitir fasteignafelag hf (REITIR.IC) is 10.25%.

The Cost of Debt of Reitir fasteignafelag hf (REITIR.IC) is 11.45%.

	Range	Selected
Cost of equity	9.30% - 11.20%	10.25%
Tax rate	25.20% - 27.60%	26.40%
Cost of debt	4.00% - 18.90%	11.45%
WACC	5.6% - 12.6%	9.1%

WACC

REITIR.IC WACC calculation

Category	Low	High

Long-term bond rate	7.1%	7.6%
Equity market risk premium	6.3%	7.3%
Adjusted beta	0.35	0.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	11.20%

Tax rate	25.20%	27.60%
Debt/Equity ratio	1.42	1.42
Cost of debt	4.00%	18.90%

After-tax WACC	5.6%	12.6%


Selected WACC	9.1%

REITIR.IC'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 REITIR.IC:

cost_of_equity (10.25%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.35) + 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.