The WACC of Wizz Air Holdings PLC (WIZZ.L) is 12.9%.
| Range | Selected | |
| Cost of equity | 13.40% - 23.90% | 18.65% |
| Tax rate | 3.80% - 6.00% | 4.90% |
| Cost of debt | 4.00% - 21.00% | 12.50% |
| WACC | 5.4% - 20.4% | 12.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.58 | 2.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.40% | 23.90% |
| Tax rate | 3.80% | 6.00% |
| Debt/Equity ratio | 5.14 | 5.14 |
| Cost of debt | 4.00% | 21.00% |
| After-tax WACC | 5.4% | 20.4% |
| Selected WACC | 12.9% | |
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 WIZZ.L:
cost_of_equity (18.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.58) + 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.