TYRES.HE WACC - Weighted Average Cost of Capital

The WACC of Nokian Tyres plc (TYRES.HE) is 6.9%.

The Cost of Equity of Nokian Tyres plc (TYRES.HE) is 8.70%.

The Cost of Debt of Nokian Tyres plc (TYRES.HE) is 6.25%.

	Range	Selected
Cost of equity	7.70% - 9.70%	8.70%
Tax rate	19.60% - 23.10%	21.35%
Cost of debt	4.50% - 8.00%	6.25%
WACC	5.8% - 8.0%	6.9%

WACC

TYRES.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.88	0.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.70%	9.70%

Tax rate	19.60%	23.10%
Debt/Equity ratio	0.87	0.87
Cost of debt	4.50%	8.00%

After-tax WACC	5.8%	8.0%


Selected WACC	6.9%

TYRES.HE'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 TYRES.HE:

cost_of_equity (8.70%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.88) + 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.