The WACC of Vilniaus Baldai AB (VBL1L.VS) is 8.0%.
| Range | Selected | |
| Cost of equity | 8.40% - 13.10% | 10.75% |
| Tax rate | 16.70% - 22.10% | 19.40% |
| Cost of debt | 4.90% - 5.20% | 5.05% |
| WACC | 6.7% - 9.4% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.79 | 1.18 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 13.10% |
| Tax rate | 16.70% | 22.10% |
| Debt/Equity ratio | 0.69 | 0.69 |
| Cost of debt | 4.90% | 5.20% |
| After-tax WACC | 6.7% | 9.4% |
| Selected WACC | 8.0% | |
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 VBL1L.VS:
cost_of_equity (10.75%) = risk_free_rate (3.65%) + equity_risk_premium (6.80%) * adjusted_beta (0.79) + 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.