The WACC of Siminn hf (SIMINN.IC) is 10.8%.
| Range | Selected | |
| Cost of equity | 11.00% - 13.00% | 12.00% |
| Tax rate | 19.80% - 20.70% | 20.25% |
| Cost of debt | 8.90% - 12.30% | 10.60% |
| WACC | 9.7% - 11.9% | 10.8% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.61 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.00% | 13.00% |
| Tax rate | 19.80% | 20.70% |
| Debt/Equity ratio | 0.51 | 0.51 |
| Cost of debt | 8.90% | 12.30% |
| After-tax WACC | 9.7% | 11.9% |
| Selected WACC | 10.8% | |
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 SIMINN.IC:
cost_of_equity (12.00%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.61) + 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.