SK3.IR WACC - Weighted Average Cost of Capital

The WACC of Smurfit Kappa Group PLC (SK3.IR) is 6.7%.

The Cost of Equity of Smurfit Kappa Group PLC (SK3.IR) is 7.95%.

The Cost of Debt of Smurfit Kappa Group PLC (SK3.IR) is 4.25%.

	Range	Selected
Cost of equity	6.60% - 9.30%	7.95%
Tax rate	26.90% - 27.40%	27.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	5.7% - 7.7%	6.7%

WACC

SK3.IR WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.66	0.8

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	9.30%

Tax rate	26.90%	27.40%
Debt/Equity ratio	0.35	0.35
Cost of debt	4.00%	4.50%

After-tax WACC	5.7%	7.7%


Selected WACC	6.7%

SK3.IR'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 SK3.IR:

cost_of_equity (7.95%) = risk_free_rate (2.95%) + equity_risk_premium (6.50%) * adjusted_beta (0.66) + 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.