The WACC of Syn hf (SYN.IC) is 8.5%.
| Range | Selected | |
| Cost of equity | 16.20% - 20.40% | 18.30% |
| Tax rate | 14.20% - 16.40% | 15.30% |
| Cost of debt | 5.70% - 7.00% | 6.35% |
| WACC | 7.7% - 9.4% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 1.45 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.20% | 20.40% |
| Tax rate | 14.20% | 16.40% |
| Debt/Equity ratio | 3.08 | 3.08 |
| Cost of debt | 5.70% | 7.00% |
| After-tax WACC | 7.7% | 9.4% |
| Selected WACC | 8.5% | |
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 SYN.IC:
cost_of_equity (18.30%) = risk_free_rate (7.35%) + equity_risk_premium (6.80%) * adjusted_beta (1.45) + 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.