WRT1V.HE WACC - Weighted Average Cost of Capital

The WACC of Wartsila Oyj Abp (WRT1V.HE) is 9.4%.

The Cost of Equity of Wartsila Oyj Abp (WRT1V.HE) is 9.50%.

The Cost of Debt of Wartsila Oyj Abp (WRT1V.HE) is 5.50%.

	Range	Selected
Cost of equity	8.20% - 10.80%	9.50%
Tax rate	26.20% - 29.60%	27.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	8.0% - 10.7%	9.4%

WACC

WRT1V.HE WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.7%	6.7%
Adjusted beta	0.96	1.06

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	10.80%

Tax rate	26.20%	29.60%
Debt/Equity ratio	0.03	0.03
Cost of debt	4.00%	7.00%

After-tax WACC	8.0%	10.7%


Selected WACC	9.4%

WRT1V.HE'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 WRT1V.HE:

cost_of_equity (9.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.96) + 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.