The WACC of SOL Global Investments Corp (SOL.CN) is 7.6%.
Range | Selected | |
Cost of equity | 7.40% - 14.00% | 10.70% |
Tax rate | 3.30% - 9.70% | 6.50% |
Cost of debt | 6.50% - 7.00% | 6.75% |
WACC | 6.6% - 8.5% | 7.6% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 0.83 | 1.62 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.40% | 14.00% |
Tax rate | 3.30% | 9.70% |
Debt/Equity ratio | 2.47 | 2.47 |
Cost of debt | 6.50% | 7.00% |
After-tax WACC | 6.6% | 8.5% |
Selected WACC | 7.6% | |
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 SOL.CN:
cost_of_equity (10.70%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.83) + 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.