The WACC of Savosolar Oyj (SAVOS.ST) is 28.8%.
| Range | Selected | |
| Cost of equity | 5.10% - 8.10% | 6.60% |
| Tax rate | -% - 0.10% | 0.05% |
| Cost of debt | 7.00% - 180.70% | 93.85% |
| WACC | 5.6% - 51.9% | 28.8% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.42 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.10% | 8.10% |
| Tax rate | -% | 0.10% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 7.00% | 180.70% |
| After-tax WACC | 5.6% | 51.9% |
| Selected WACC | 28.8% | |
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 SAVOS.ST:
cost_of_equity (6.60%) = risk_free_rate (3.05%) + equity_risk_premium (6.00%) * adjusted_beta (0.42) + 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.