The WACC of Frauenthal Holding AG (FKA.VI) is 5.3%.
| Range | Selected | |
| Cost of equity | 5.00% - 6.90% | 5.95% |
| Tax rate | 17.40% - 20.50% | 18.95% |
| Cost of debt | 4.90% - 6.40% | 5.65% |
| WACC | 4.6% - 6.0% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 0.4 | 0.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.00% | 6.90% |
| Tax rate | 17.40% | 20.50% |
| Debt/Equity ratio | 0.9 | 0.9 |
| Cost of debt | 4.90% | 6.40% |
| After-tax WACC | 4.6% | 6.0% |
| Selected WACC | 5.3% | |
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 FKA.VI:
cost_of_equity (5.95%) = risk_free_rate (3.05%) + equity_risk_premium (6.20%) * adjusted_beta (0.4) + 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.