Data
Cost of Equity Estimation Inputs
The inputs to the cost of equity estimation are presented below. They stem from our long-term research, which we will continue in the future. These inputs are updated on a monthly basis and published by end of the following month.
The calculation of the cost of equity is based on the commonly used Capital Asset Pricing Model (CAPM):
CoE = rf + 𝛽 × ERP
where rf is the risk-free rate (yield of the local sovereign bonds with 10Y tenor),
𝛽 is the beta coefficient, and
ERP is the equity risk premium.
Equity Risk Premium
The equity risk premium is estimated based on the current stock prices and expected dividends or free cash flows of stocks as an implied equity risk premium. The estimate is based on the publicly traded companies residing in European countries with the credit rating between Aa1 to Baa3 and is calculated as a 3-month average.
To estimate the cost of equity, the equity risk premium should be complemented by an appropriate risk-free rate and beta coeffficient.
8.6% as of 30 November 2024
medium companies (market capitalisation below EUR 1,089 million)
5.9% as of 30 November 2024
large companies (market capitalisation from EUR 1,089 million)