RM.L WACC - Weighted Average Cost of Capital
The WACC of RM PLC (RM.L) is 9.8%.
| Range | Selected | |
| Cost of equity | 9.4% - 12.3% | 10.85% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 5.7% - 15.8% | 10.75% |
| WACC | 7.1% - 12.6% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.91 | 1.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.4% | 12.3% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 0.91 | 0.91 |
| Cost of debt | 5.7% | 15.8% |
| After-tax WACC | 7.1% | 12.6% |
| Selected WACC | 9.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| RM.L | RM PLC | 0.91 | -0.87 | -0.5 |
| CLXN.SW | Crealogix Holding AG | 0.47 | 0.25 | 0.18 |
| CSH.DE | CENIT AG | 0.7 | 0.73 | 0.47 |
| FAA.DE | Fabasoft AG | 0.04 | 0.58 | 0.56 |
| FDP.L | First Derivatives PLC | 0.09 | 0.55 | 0.51 |
| GENX.PA | Generix Group SA | 0.1 | 0.43 | 0.4 |
| ICT.AS | ICT Group NV | 0.23 | 1.44 | 1.21 |
| LOGO.IS | Logo Yazilim Sanayi ve Ticaret AS | 0.05 | 0.83 | 0.8 |
| TRCS.L | Tracsis PLC | 0.01 | 0.72 | 0.71 |
| VINCIT.HE | Vincit Oyj | 0 | 0.92 | 0.92 |
| Low | High | |
| Unlevered beta | 0.5 | 0.62 |
| Relevered beta | 0.87 | 1.07 |
| Adjusted relevered beta | 0.91 | 1.05 |
RM.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 RM.L:
cost_of_equity (10.85%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.91) + 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.