RTO.L
Rentokil Initial PLC
Price:  
350.4 
GBP
Volume:  
2,834,646
United Kingdom | Commercial Services & Supplies

RTO.L WACC - Weighted Average Cost of Capital

The WACC of Rentokil Initial PLC (RTO.L) is 8.2%.

The Cost of Equity of Rentokil Initial PLC (RTO.L) is 10.25%.
The Cost of Debt of Rentokil Initial PLC (RTO.L) is 4.85%.

RangeSelected
Cost of equity8.8% - 11.7%10.25%
Tax rate20.6% - 22.1%21.35%
Cost of debt4.0% - 5.7%4.85%
WACC7.0% - 9.4%8.2%
WACC

RTO.L WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium6.0%7.0%
Adjusted beta0.810.95
Additional risk adjustments0.0%0.5%
Cost of equity8.8%11.7%
Tax rate20.6%22.1%
Debt/Equity ratio
0.470.47
Cost of debt4.0%5.7%
After-tax WACC7.0%9.4%
Selected WACC8.2%

RTO.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 RTO.L:

cost_of_equity (10.25%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.81) + 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.