The WACC of Skeljungur Ltd (SKEL.IC) is 12.4%.
| Range | Selected | |
| Cost of equity | 11.40% - 17.00% | 14.20% |
| Tax rate | 5.20% - 9.60% | 7.40% |
| Cost of debt | 8.30% - 9.20% | 8.75% |
| WACC | 10.4% - 14.4% | 12.4% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.68 | 1.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.40% | 17.00% |
| Tax rate | 5.20% | 9.60% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 8.30% | 9.20% |
| After-tax WACC | 10.4% | 14.4% |
| Selected WACC | 12.4% | |
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 SKEL.IC:
cost_of_equity (14.20%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (0.68) + 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.