VEL.L
Velocity Composites PLC
Price:  
29 
GBP
Volume:  
198,042
United Kingdom | Aerospace & Defense

VEL.L WACC - Weighted Average Cost of Capital

The WACC of Velocity Composites PLC (VEL.L) is 9.6%.

The Cost of Equity of Velocity Composites PLC (VEL.L) is 10.1%.
The Cost of Debt of Velocity Composites PLC (VEL.L) is 7.15%.

RangeSelected
Cost of equity8.9% - 11.3%10.1%
Tax rate8.1% - 15.5%11.8%
Cost of debt7.0% - 7.3%7.15%
WACC8.6% - 10.6%9.6%
WACC

VEL.L WACC calculation

CategoryLowHigh
Long-term bond rate4.0%4.5%
Equity market risk premium6.0%7.0%
Adjusted beta0.820.91
Additional risk adjustments0.0%0.5%
Cost of equity8.9%11.3%
Tax rate8.1%15.5%
Debt/Equity ratio
0.160.16
Cost of debt7.0%7.3%
After-tax WACC8.6%10.6%
Selected WACC9.6%

VEL.L WACC - Detailed calculations of Beta

LowHigh
Unlevered beta0.650.76
Relevered beta0.730.87
Adjusted relevered beta0.820.91

VEL.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 VEL.L:

cost_of_equity (10.10%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.82) + 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.