SRV1V.HE WACC - Weighted Average Cost of Capital

The WACC of SRV Yhtiot Oyj (SRV1V.HE) is 11.0%.

The Cost of Equity of SRV Yhtiot Oyj (SRV1V.HE) is 7.50%.

The Cost of Debt of SRV Yhtiot Oyj (SRV1V.HE) is 14.30%.

	Range	Selected
Cost of equity	6.20% - 8.80%	7.50%
Tax rate	5.90% - 7.60%	6.75%
Cost of debt	5.90% - 22.70%	14.30%
WACC	5.8% - 16.2%	11.0%

WACC

SRV1V.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.6	0.76

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.20%	8.80%

Tax rate	5.90%	7.60%
Debt/Equity ratio	1.52	1.52
Cost of debt	5.90%	22.70%

After-tax WACC	5.8%	16.2%


Selected WACC	11.0%

SRV1V.HE'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 SRV1V.HE:

cost_of_equity (7.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.6) + 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.