The WACC of WAG Payment Solutions PLC (WPS.L) is 4.7%.
| Range | Selected | |
| Cost of equity | 4.80% - 5.70% | 5.25% |
| Tax rate | 30.20% - 40.20% | 35.20% |
| Cost of debt | 5.20% - 6.30% | 5.75% |
| WACC | 4.4% - 5.1% | 4.7% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | -0.04 | -0.04 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 4.80% | 5.70% |
| Tax rate | 30.20% | 40.20% |
| Debt/Equity ratio | 0.51 | 0.51 |
| Cost of debt | 5.20% | 6.30% |
| After-tax WACC | 4.4% | 5.1% |
| Selected WACC | 4.7% | |
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 WPS.L:
cost_of_equity (5.25%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (-0.04) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.