RWE.DE
RWE AG
Price:  
36.17 
EUR
Volume:  
1,476,139
Germany | Multi-Utilities

RWE.DE WACC - Weighted Average Cost of Capital

The WACC of RWE AG (RWE.DE) is 5.3%.

The Cost of Equity of RWE AG (RWE.DE) is 6.4%.
The Cost of Debt of RWE AG (RWE.DE) is 5%.

RangeSelected
Cost of equity5.4% - 7.4%6.4%
Tax rate30.0% - 30.0%30%
Cost of debt5.0% - 5.0%5%
WACC4.7% - 5.9%5.3%
WACC

RWE.DE WACC calculation

CategoryLowHigh
Long-term bond rate2.8%3.3%
Equity market risk premium5.1%6.1%
Adjusted beta0.520.59
Additional risk adjustments0.0%0.5%
Cost of equity5.4%7.4%
Tax rate30.0%30.0%
Debt/Equity ratio
0.580.58
Cost of debt5.0%5.0%
After-tax WACC4.7%5.9%
Selected WACC5.3%

RWE.DE'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 RWE.DE:

cost_of_equity (6.40%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.52) + 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.