XPP.L WACC - Weighted Average Cost of Capital

The WACC of XP Power Ltd (XPP.L) is 9.5%.

The Cost of Equity of XP Power Ltd (XPP.L) is 8.70%.

The Cost of Debt of XP Power Ltd (XPP.L) is 18.70%.

	Range	Selected
Cost of equity	6.90% - 10.50%	8.70%
Tax rate	29.90% - 43.00%	36.45%
Cost of debt	13.40% - 24.00%	18.70%
WACC	7.6% - 11.4%	9.5%

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	0.48	0.78

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.50%

Tax rate	29.90%	43.00%
Debt/Equity ratio	0.41	0.41
Cost of debt	13.40%	24.00%

After-tax WACC	7.6%	11.4%


Selected WACC	9.5%

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 (8.70%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.48) + 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.