RKT.L WACC - Weighted Average Cost of Capital

The WACC of Reckitt Benckiser Group PLC (RKT.L) is 7.7%.

The Cost of Equity of Reckitt Benckiser Group PLC (RKT.L) is 8.80%.

The Cost of Debt of Reckitt Benckiser Group PLC (RKT.L) is 4.45%.

	Range	Selected
Cost of equity	7.90% - 9.70%	8.80%
Tax rate	31.70% - 34.50%	33.10%
Cost of debt	4.00% - 4.90%	4.45%
WACC	6.9% - 8.5%	7.7%

WACC

RKT.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.65	0.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	9.70%

Tax rate	31.70%	34.50%
Debt/Equity ratio	0.22	0.22
Cost of debt	4.00%	4.90%

After-tax WACC	6.9%	8.5%


Selected WACC	7.7%

RKT.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 RKT.L:

cost_of_equity (8.80%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.65) + 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.