The WACC of Tiscali SpA (TIS.MI) is 8.3%.
| Range | Selected | |
| Cost of equity | 8.90% - 13.00% | 10.95% |
| Tax rate | 0.30% - 0.50% | 0.40% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.2% - 9.5% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.53 | 0.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.90% | 13.00% |
| Tax rate | 0.30% | 0.50% |
| Debt/Equity ratio | 0.79 | 0.79 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.2% | 9.5% |
| Selected WACC | 8.3% | |
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 TIS.MI:
cost_of_equity (10.95%) = risk_free_rate (4.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.53) + 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.