STERV.HE WACC - Weighted Average Cost of Capital

The WACC of Stora Enso Oyj (STERV.HE) is 7.4%.

The Cost of Equity of Stora Enso Oyj (STERV.HE) is 9.15%.

The Cost of Debt of Stora Enso Oyj (STERV.HE) is 5.15%.

	Range	Selected
Cost of equity	7.90% - 10.40%	9.15%
Tax rate	12.70% - 14.70%	13.70%
Cost of debt	4.00% - 6.30%	5.15%
WACC	6.3% - 8.6%	7.4%

WACC

STERV.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.91	1

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	10.40%

Tax rate	12.70%	14.70%
Debt/Equity ratio	0.57	0.57
Cost of debt	4.00%	6.30%

After-tax WACC	6.3%	8.6%


Selected WACC	7.4%

STERV.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 STERV.HE:

cost_of_equity (9.15%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.91) + 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.