The WACC of William Hill PLC (WMH.L) is 8.5%.
| Range | Selected | |
| Cost of equity | 7.40% - 10.70% | 9.05% |
| Tax rate | 2.00% - 5.40% | 3.70% |
| Cost of debt | 5.20% - 8.90% | 7.05% |
| WACC | 6.9% - 10.2% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.84 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.40% | 10.70% |
| Tax rate | 2.00% | 5.40% |
| Debt/Equity ratio | 0.28 | 0.28 |
| Cost of debt | 5.20% | 8.90% |
| After-tax WACC | 6.9% | 10.2% |
| Selected WACC | 8.5% | |
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 WMH.L:
cost_of_equity (9.05%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (0.84) + 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.