The WACC of Rosenbauer International AG (ROS.VI) is 7.2%.
| Range | Selected | |
| Cost of equity | 6.00% - 8.60% | 7.30% |
| Tax rate | 19.90% - 22.40% | 21.15% |
| Cost of debt | 6.70% - 11.30% | 9.00% |
| WACC | 5.7% - 8.7% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 0.57 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 8.60% |
| Tax rate | 19.90% | 22.40% |
| Debt/Equity ratio | 0.88 | 0.88 |
| Cost of debt | 6.70% | 11.30% |
| After-tax WACC | 5.7% | 8.7% |
| Selected WACC | 7.2% | |
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 ROS.VI:
cost_of_equity (7.30%) = risk_free_rate (3.05%) + equity_risk_premium (6.20%) * adjusted_beta (0.57) + 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.