The WACC of Vodacom Group Ltd (VOD.JO) is 16.4%.
| Range | Selected | |
| Cost of equity | 18.10% - 20.10% | 19.10% |
| Tax rate | 27.80% - 28.00% | 27.90% |
| Cost of debt | 9.30% - 9.70% | 9.50% |
| WACC | 15.5% - 17.2% | 16.4% |
| Category | Low | High |
| Long-term bond rate | 9.1% | 9.6% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.94 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.10% | 20.10% |
| Tax rate | 27.80% | 28.00% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 9.30% | 9.70% |
| After-tax WACC | 15.5% | 17.2% |
| Selected WACC | 16.4% | |
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 (19.10%) = risk_free_rate (9.35%) + equity_risk_premium (10.00%) * adjusted_beta (0.94) + 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.