TUNE.L
Focusrite PLC
Price:  
140.00 
GBP
Volume:  
721,550.00
United Kingdom | Household Durables
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TUNE.L WACC - Weighted Average Cost of Capital

The WACC of Focusrite PLC (TUNE.L) is 7.4%.

The Cost of Equity of Focusrite PLC (TUNE.L) is 9.30%.
The Cost of Debt of Focusrite PLC (TUNE.L) is 5.00%.

Range Selected
Cost of equity 7.60% - 11.00% 9.30%
Tax rate 19.30% - 20.50% 19.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.3% - 8.5% 7.4%
WACC

TUNE.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.6 0.85
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 11.00%
Tax rate 19.30% 20.50%
Debt/Equity ratio 0.55 0.55
Cost of debt 5.00% 5.00%
After-tax WACC 6.3% 8.5%
Selected WACC 7.4%

TUNE.L's CAPM model and how its cost of Equity is calculated

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 TUNE.L:

cost_of_equity (9.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.6) + 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.