The WACC of Vodacom Group Ltd (VOD.JO) is 13.8%.
| Range | Selected | |
| Cost of equity | 14.90% - 16.60% | 15.75% |
| Tax rate | 28.00% - 29.20% | 28.60% |
| Cost of debt | 10.30% - 10.40% | 10.35% |
| WACC | 13.2% - 14.4% | 13.8% |
| Category | Low | High |
| Long-term bond rate | 9.1% | 9.6% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.61 | 0.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.90% | 16.60% |
| Tax rate | 28.00% | 29.20% |
| Debt/Equity ratio | 0.31 | 0.31 |
| Cost of debt | 10.30% | 10.40% |
| After-tax WACC | 13.2% | 14.4% |
| Selected WACC | 13.8% | |
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 (15.75%) = risk_free_rate (9.35%) + equity_risk_premium (10.00%) * adjusted_beta (0.61) + 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.