XPP.L WACC - Weighted Average Cost of Capital

The WACC of XP Power Ltd (XPP.L) is 11.9%.

The Cost of Equity of XP Power Ltd (XPP.L) is 12.20%.

The Cost of Debt of XP Power Ltd (XPP.L) is 15.45%.

	Range	Selected
Cost of equity	9.80% - 14.60%	12.20%
Tax rate	20.90% - 27.30%	24.10%
Cost of debt	6.90% - 24.00%	15.45%
WACC	8.0% - 15.8%	11.9%

WACC

XPP.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.97	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	14.60%

Tax rate	20.90%	27.30%
Debt/Equity ratio	0.7	0.7
Cost of debt	6.90%	24.00%

After-tax WACC	8.0%	15.8%


Selected WACC	11.9%

XPP.L'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 XPP.L:

cost_of_equity (12.20%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.97) + 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.