The WACC of Totalbanken A/S (TOTA.CO) is 6.2%.
| Range | Selected | |
| Cost of equity | 5.20% - 7.50% | 6.35% |
| Tax rate | 4.50% - 13.00% | 8.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.1% - 7.2% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 0.4% | 0.9% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.43 | 0.58 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 5.20% | 7.50% |
| Tax rate | 4.50% | 13.00% |
| Debt/Equity ratio | 0.1 | 0.1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.1% | 7.2% |
| Selected WACC | 6.2% | |
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 TOTA.CO:
cost_of_equity (6.35%) = risk_free_rate (0.65%) + equity_risk_premium (5.70%) * adjusted_beta (0.43) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.