VTU.L WACC - Weighted Average Cost of Capital

The WACC of Vertu Motors PLC (VTU.L) is 9.2%.

The Cost of Equity of Vertu Motors PLC (VTU.L) is 12.75%.

The Cost of Debt of Vertu Motors PLC (VTU.L) is 7.90%.

	Range	Selected
Cost of equity	10.80% - 14.70%	12.75%
Tax rate	24.90% - 26.20%	25.55%
Cost of debt	6.60% - 9.20%	7.90%
WACC	7.8% - 10.6%	9.2%

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	1.13	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	14.70%

Tax rate	24.90%	26.20%
Debt/Equity ratio	1.07	1.07
Cost of debt	6.60%	9.20%

After-tax WACC	7.8%	10.6%


Selected WACC	9.2%

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 (12.75%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.