The WACC of VEF AS (VEF1R.RG) is 5.3%.
| Range | Selected | |
| Cost of equity | 3.40% - 5.80% | 4.60% |
| Tax rate | 20.00% - 20.00% | 20.00% |
| Cost of debt | 5.80% - 12.80% | 9.30% |
| WACC | 3.7% - 6.9% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.34 | 0.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 3.40% | 5.80% |
| Tax rate | 20.00% | 20.00% |
| Debt/Equity ratio | 0.3 | 0.3 |
| Cost of debt | 5.80% | 12.80% |
| After-tax WACC | 3.7% | 6.9% |
| Selected WACC | 5.3% | |
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 VEF1R.RG:
cost_of_equity (4.60%) = risk_free_rate (1.25%) + equity_risk_premium (7.35%) * adjusted_beta (0.34) + 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.