The WACC of Technicolor SA (TCH.PA) is 8.8%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.00% | 6.15% |
| Tax rate | 5.30% - 6.90% | 6.10% |
| Cost of debt | 5.70% - 19.10% | 12.40% |
| WACC | 5.3% - 12.2% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 6.2% | 7.2% |
| Adjusted beta | 0.35 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.30% | 7.00% |
| Tax rate | 5.30% | 6.90% |
| Debt/Equity ratio | 0.94 | 0.94 |
| Cost of debt | 5.70% | 19.10% |
| After-tax WACC | 5.3% | 12.2% |
| Selected WACC | 8.8% | |
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 TCH.PA:
cost_of_equity (6.15%) = risk_free_rate (3.35%) + equity_risk_premium (6.70%) * adjusted_beta (0.35) + 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.