WTRE
Watford Holdings Ltd
Price:  
17.60 
USD
Volume:  
618.00
Bermuda | Insurance
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WTRE WACC - Weighted Average Cost of Capital

The WACC of Watford Holdings Ltd (WTRE) is 6.6%.

The Cost of Equity of Watford Holdings Ltd (WTRE) is 8.55%.
The Cost of Debt of Watford Holdings Ltd (WTRE) is 5.00%.

Range Selected
Cost of equity 7.40% - 9.70% 8.55%
Tax rate 27.00% - 27.00% 27.00%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.9% - 7.4% 6.6%
WACC

WTRE WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 0.99 1.06
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 9.70%
Tax rate 27.00% 27.00%
Debt/Equity ratio 0.63 0.63
Cost of debt 5.00% 5.00%
After-tax WACC 5.9% 7.4%
Selected WACC 6.6%

WTRE'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 WTRE:

cost_of_equity (8.55%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.99) + 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.