SGE.L
Sage Group PLC
Price:  
1,085.50 
GBP
Volume:  
1,629,753.00
United Kingdom | Software
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SGE.L WACC - Weighted Average Cost of Capital

The WACC of Sage Group PLC (SGE.L) is 8.9%.

The Cost of Equity of Sage Group PLC (SGE.L) is 9.65%.
The Cost of Debt of Sage Group PLC (SGE.L) is 4.35%.

Range Selected
Cost of equity 8.50% - 10.80% 9.65%
Tax rate 20.70% - 23.40% 22.05%
Cost of debt 4.00% - 4.70% 4.35%
WACC 7.9% - 10.0% 8.9%
WACC

SGE.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.75 0.83
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.50% 10.80%
Tax rate 20.70% 23.40%
Debt/Equity ratio 0.12 0.12
Cost of debt 4.00% 4.70%
After-tax WACC 7.9% 10.0%
Selected WACC 8.9%

SGE.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 SGE.L:

cost_of_equity (9.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.75) + 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.