The WACC of Synthomer PLC (SYNT.L) is 12.9%.
| Range | Selected | |
| Cost of equity | 16.30% - 26.10% | 21.20% |
| Tax rate | 24.60% - 28.80% | 26.70% |
| Cost of debt | 6.40% - 24.00% | 15.20% |
| WACC | 7.0% - 18.8% | 12.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 2.07 | 3.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.30% | 26.10% |
| Tax rate | 24.60% | 28.80% |
| Debt/Equity ratio | 4.36 | 4.36 |
| Cost of debt | 6.40% | 24.00% |
| After-tax WACC | 7.0% | 18.8% |
| Selected WACC | 12.9% | |
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 SYNT.L:
cost_of_equity (21.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (2.07) + 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.