The WACC of Signature Aviation PLC (SIG.L) is 166.3%.
| Range | Selected | |
| Cost of equity | 7.10% - 10.00% | 8.55% |
| Tax rate | 19.90% - 43.00% | 31.45% |
| Cost of debt | 7.00% - 1,515.60% | 761.30% |
| WACC | 6.6% - 326.0% | 166.3% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.78 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 10.00% |
| Tax rate | 19.90% | 43.00% |
| Debt/Equity ratio | 0.59 | 0.59 |
| Cost of debt | 7.00% | 1,515.60% |
| After-tax WACC | 6.6% | 326.0% |
| Selected WACC | 166.3% | |
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 SIG.L:
cost_of_equity (8.55%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.78) + 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.