The cost of capital module

Cost of Capital/Weighted Average Cost of Capital (WACC)
Calculate professionally and efficiently

Capital costs are an essential part of any business valuation.
The SmartZebra platform allows you to calculate standard-compliant capital costs quickly and easily.

SmartZebra capital costs

Weighted Average Cost of Capital (WACC)

The WACC (also known as “weighted cost of capital”) is used
to determine a market-based return on total capital.

Both equity and debt are included, taking into account tax effects. The WACC is an integral part of the determination of business value using the DCF approach and in impairment tests.

Applications
Business valuations according to IDW Standard 1 and KFS/BW 1
Valuation report according to IDW Standard 13
Valuation report according to IDW Standard 5
Indicative value
Purchase Price Allocation (PPA)
Squeeze-out valuations
Impairment tests IFRS / Local-GAAP
Income approach
Discounted Cash Flow approach

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Cost of capital features

Features and settings in detail

smartZebra-Kapitalkosten-Detail-Beta-Faktor

Beta factor

For the calculation, the median of the peer group's unlevered beta factor is used. Means and quantiles are also shown. The re-levering is based on the individual gearing of the valuation object.

Credit spread

Credit spreads can be calculated for terms of between 1 and 30 years for various ratings. Data is available on a sector-specific basis or as an average of all sectors.

smartZebra-Kapitalkosten-Detail-Kreditaufschlag
smartZebra-Kapitalkosten-Detail-Basiszinssatz

Riskfree base rate

Riskfree base rates for more than 50 countries. You can map the specifications of the IDW S1 and KFS/BW1 standards using the settings for term, riskfree base rate curve, rounding rule and growth rate for present value equivalent interest.

Equity risk premium

The equity risk premium can be set flexibly. This is an equity risk premium before personal taxes on the CAPM. For Germany, the IDW range of recommendation, the recommendation of the capital cost study by KPMG and data from Professor Aswath Damodaran are shown.

smartZebra-Kapitalkosten-Detail-Länderrisikoprämie
smartZebra-Kapitalkosten-Detail-Länderrisikoprämie

Country risk premium

The application of the country risk premium is optional. The data from Prof. Damodaran serve as a basis.

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Capital market data of the highest quality — up to date and in compliance with standards

Calculating beta factors for business valuation is particularly challenging, as the data must be accurate and comprehensible in order to avoid expensive mistakes. At SmartZebra, we understand the importance of accurate beta calculations, especially when it comes to future-oriented corporate values. That is why we offer a comprehensive database of over 27,000 companies from the world's major capital markets, including a search function that helps to identify suitable peer groups for difficult cases.

But what is the beta factor anyway and why is it so important? The beta factor of a stock describes the risk in relation to the risk of the entire stock market. The beta factor is determined by the regression of the return on stocks against the yield of a broad stock index. Companies with a beta factor of more than 1 have a higher risk than the market, while companies with a beta factor of less than 1 are considered to be more stable.

Our SmartZebra database offers a variety of industry betas for 20 sectors and 129 sub-sectors. We transparently display the number of companies in the sub-sectors and which companies they are. In combination with our company database and our intelligent search function, you can quickly find the right peer groups.

Whether you're an experienced business analyst or just need an overview, our database of high-quality capital market data will help you work more precisely and effectively. Try it out today!