The WACC of Vestjysk Bank A/S (VJBA.CO) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.30% - 6.90% | 6.10% |
| Tax rate | 2.40% - 3.80% | 3.10% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.3% - 6.7% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 0.4% | 0.9% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.46 | 0.48 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 5.30% | 6.90% |
| Tax rate | 2.40% | 3.80% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.3% | 6.7% |
| Selected WACC | 6.0% | |
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 VJBA.CO:
cost_of_equity (6.10%) = risk_free_rate (0.65%) + equity_risk_premium (5.70%) * adjusted_beta (0.46) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.