The WACC of Wincanton PLC (WIN.L) is 7.8%.
| Range | Selected | |
| Cost of equity | 6.90% - 9.80% | 8.35% |
| Tax rate | 12.40% - 12.80% | 12.60% |
| Cost of debt | 4.50% - 8.70% | 6.60% |
| WACC | 6.3% - 9.3% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.53 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 9.80% |
| Tax rate | 12.40% | 12.80% |
| Debt/Equity ratio | 0.28 | 0.28 |
| Cost of debt | 4.50% | 8.70% |
| After-tax WACC | 6.3% | 9.3% |
| Selected WACC | 7.8% | |
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 WIN.L:
cost_of_equity (8.35%) = risk_free_rate (3.95%) + equity_risk_premium (6.50%) * adjusted_beta (0.53) + 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.