The WACC of Swisscom AG (SCMN.SW) is 4.2%.
| Range | Selected | |
| Cost of equity | 3.50% - 5.70% | 4.60% |
| Tax rate | 16.30% - 17.30% | 16.80% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 3.5% - 5.0% | 4.2% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.51 | 0.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.50% | 5.70% |
| Tax rate | 16.30% | 17.30% |
| Debt/Equity ratio | 0.61 | 0.61 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 3.5% | 5.0% |
| Selected WACC | 4.2% | |
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 SCMN.SW:
cost_of_equity (4.60%) = risk_free_rate (1.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.51) + 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.