VARNH.AT WACC - Weighted Average Cost of Capital

The WACC of Varvaressos European Spinning Mills SA (VARNH.AT) is 4.7%.

The Cost of Equity of Varvaressos European Spinning Mills SA (VARNH.AT) is 9.00%.

The Cost of Debt of Varvaressos European Spinning Mills SA (VARNH.AT) is 4.25%.

	Range	Selected
Cost of equity	7.40% - 10.60%	9.00%
Tax rate	1.60% - 2.50%	2.05%
Cost of debt	4.00% - 4.50%	4.25%
WACC	4.3% - 5.0%	4.7%

WACC

VARNH.AT WACC calculation

Category	Low	High

Long-term bond rate	3.3%	3.8%
Equity market risk premium	8.8%	9.8%
Adjusted beta	0.47	0.64

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	10.60%

Tax rate	1.60%	2.50%
Debt/Equity ratio	8.43	8.43
Cost of debt	4.00%	4.50%

After-tax WACC	4.3%	5.0%


Selected WACC	4.7%

VARNH.AT'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 VARNH.AT:

cost_of_equity (9.00%) = risk_free_rate (3.55%) + equity_risk_premium (9.30%) * adjusted_beta (0.47) + 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.