The WACC of Sogn Sparebank (SOGN.OL) is 4.9%.
Range | Selected | |
Cost of equity | 6.4% - 11.2% | 8.8% |
Tax rate | 19.8% - 20.3% | 20.05% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 4.5% - 5.4% | 4.9% |
Category | Low | High |
Long-term bond rate | 3.3% | 3.8% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.61 | 1.13 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.4% | 11.2% |
Tax rate | 19.8% | 20.3% |
Debt/Equity ratio | 4.14 | 4.14 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 4.5% | 5.4% |
Selected WACC | 4.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
SOGN.OL | Sogn Sparebank | 4.14 | 0.48 | 0.11 |
AASB.OL | Aasen Sparebank | 6.01 | 0.04 | 0.01 |
CRLA.PA | Caisse Regionale de Credit Agricole Mutuel du Languedoc | 0.96 | 0.71 | 0.4 |
CRLO.PA | Caisse Regionale de Credit Agricole Mutuel Loire Haute-Loire | 0.62 | 0.4 | 0.27 |
CRSU.PA | Caisse Regionale De Credit Agricole Mutuel Sud Rhone Alpes | 1.28 | 0.6 | 0.3 |
HSPG.OL | Holand og Setskog Sparebank | 23.01 | 0.37 | 0.02 |
KRAB.OL | Kraft Bank ASA | 0.11 | -0.01 | 0 |
LOLB.CO | Lollands Bank A/S | 0.1 | 0.36 | 0.34 |
NISB.OL | Nidaros Sparebank | 6.01 | 0.47 | 0.08 |
VVL.OL | Voss Veksel og Landmandsbank ASA | 1.24 | 0.58 | 0.29 |
Low | High | |
Unlevered beta | 0.1 | 0.28 |
Relevered beta | 0.42 | 1.19 |
Adjusted relevered beta | 0.61 | 1.13 |
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 SOGN.OL:
cost_of_equity (8.80%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * 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.