The WACC of Trinseo SA (TSE) is 15.3%.
| Range | Selected | |
| Cost of equity | 41.00% - 62.20% | 51.60% |
| Tax rate | 10.30% - 14.60% | 12.45% |
| Cost of debt | 6.40% - 23.90% | 15.15% |
| WACC | 7.8% - 22.8% | 15.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 8.06 | 10.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 41.00% | 62.20% |
| Tax rate | 10.30% | 14.60% |
| Debt/Equity ratio | 16.07 | 16.07 |
| Cost of debt | 6.40% | 23.90% |
| After-tax WACC | 7.8% | 22.8% |
| Selected WACC | 15.3% | |
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 TSE:
cost_of_equity (51.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (8.06) + 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.