VTU.L WACC - Weighted Average Cost of Capital

The WACC of Vertu Motors PLC (VTU.L) is 8.3%.

The Cost of Equity of Vertu Motors PLC (VTU.L) is 9.55%.

The Cost of Debt of Vertu Motors PLC (VTU.L) is 9.40%.

	Range	Selected
Cost of equity	7.80% - 11.30%	9.55%
Tax rate	24.90% - 26.10%	25.50%
Cost of debt	9.20% - 9.60%	9.40%
WACC	7.4% - 9.3%	8.3%

WACC

VTU.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.64	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.80%	11.30%

Tax rate	24.90%	26.10%
Debt/Equity ratio	0.92	0.92
Cost of debt	9.20%	9.60%

After-tax WACC	7.4%	9.3%


Selected WACC	8.3%

VTU.L's CAPM model and how its cost of Equity is calculated

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 VTU.L:

cost_of_equity (9.55%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.64) + 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.