The WACC of Vodacom Group Ltd (VOD.JO) is 16.8%.
Range | Selected | |
Cost of equity | 18.50% - 20.50% | 19.50% |
Tax rate | 28.10% - 29.30% | 28.70% |
Cost of debt | 10.10% - 10.60% | 10.35% |
WACC | 15.9% - 17.6% | 16.8% |
Category | Low | High |
Long-term bond rate | 9.1% | 9.6% |
Equity market risk premium | 9.5% | 10.5% |
Adjusted beta | 0.98 | 0.98 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 18.50% | 20.50% |
Tax rate | 28.10% | 29.30% |
Debt/Equity ratio | 0.29 | 0.29 |
Cost of debt | 10.10% | 10.60% |
After-tax WACC | 15.9% | 17.6% |
Selected WACC | 16.8% | |
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 VOD.JO:
cost_of_equity (19.50%) = risk_free_rate (9.35%) + equity_risk_premium (10.00%) * adjusted_beta (0.98) + 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.