The WACC of Valmieras Stikla Skiedra AS (VSS1R.RG) is 10.2%.
| Range | Selected | |
| Cost of equity | 16.00% - 25.30% | 20.65% |
| Tax rate | 2.80% - 11.60% | 7.20% |
| Cost of debt | 4.00% - 14.10% | 9.05% |
| WACC | 5.9% - 14.6% | 10.2% |
| Category | Low | High |
| Long-term bond rate | 1.0% | 1.5% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 2.52 | 3.35 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.00% | 25.30% |
| Tax rate | 2.80% | 11.60% |
| Debt/Equity ratio | 5.1 | 5.1 |
| Cost of debt | 4.00% | 14.10% |
| After-tax WACC | 5.9% | 14.6% |
| Selected WACC | 10.2% | |
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 VSS1R.RG:
cost_of_equity (20.65%) = risk_free_rate (1.25%) + equity_risk_premium (6.40%) * adjusted_beta (2.52) + 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.