The WACC of Ignitis Grupe AB (IGN1L.VS) is 5.9%.
| Range | Selected | |
| Cost of equity | 7.60% - 9.90% | 8.75% |
| Tax rate | 10.10% - 11.50% | 10.80% |
| Cost of debt | 4.00% - 4.70% | 4.35% |
| WACC | 5.3% - 6.5% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.4% | 3.9% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.66 | 0.75 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.60% | 9.90% |
| Tax rate | 10.10% | 11.50% |
| Debt/Equity ratio | 1.43 | 1.43 |
| Cost of debt | 4.00% | 4.70% |
| After-tax WACC | 5.3% | 6.5% |
| Selected WACC | 5.9% | |
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 IGN1L.VS:
cost_of_equity (8.75%) = risk_free_rate (3.65%) + equity_risk_premium (6.80%) * adjusted_beta (0.66) + 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.