The WACC of Soltech Energy Sweden AB (SOLT.ST) is 7.4%.
| Range | Selected | |
| Cost of equity | 7.90% - 12.40% | 10.15% |
| Tax rate | 4.30% - 6.80% | 5.55% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.3% - 8.5% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 2.5% | 3.0% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.06 | 1.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.90% | 12.40% |
| Tax rate | 4.30% | 6.80% |
| Debt/Equity ratio | 1.04 | 1.04 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.3% | 8.5% |
| Selected WACC | 7.4% | |
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 SOLT.ST:
cost_of_equity (10.15%) = risk_free_rate (2.75%) + equity_risk_premium (5.60%) * adjusted_beta (1.06) + 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.