The WACC of Venator Materials PLC (VNTR) is 8.0%.
| Range | Selected | |
| Cost of equity | 40.70% - 54.30% | 47.50% |
| Tax rate | 26.20% - 34.30% | 30.25% |
| Cost of debt | 6.60% - 13.60% | 10.10% |
| WACC | 5.8% - 10.2% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 7.31 | 8.2 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 40.70% | 54.30% |
| Tax rate | 26.20% | 34.30% |
| Debt/Equity ratio | 36.06 | 36.06 |
| Cost of debt | 6.60% | 13.60% |
| After-tax WACC | 5.8% | 10.2% |
| 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 VNTR:
cost_of_equity (47.50%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (7.31) + 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.