The WACC of Tamburi Investment Partners SpA (TIP.MI) is 9.5%.
| Range | Selected | |
| Cost of equity | 9.60% - 12.40% | 11.00% |
| Tax rate | 4.40% - 27.50% | 15.95% |
| Cost of debt | 4.00% - 7.30% | 5.65% |
| WACC | 8.3% - 10.8% | 9.5% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.72 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 12.40% |
| Tax rate | 4.40% | 27.50% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 4.00% | 7.30% |
| After-tax WACC | 8.3% | 10.8% |
| Selected WACC | 9.5% | |
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 TIP.MI:
cost_of_equity (11.00%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.