{
  "url": "https://openlegislation.uk/eu-decision-2013-126/annex-I/division-2",
  "json_url": "https://openlegislation.uk/eu-decision-2013-126/annex-I/division-2.json",
  "legislation": "eudn/2013/126",
  "legislation_title": "Commission Decision of 8 May 2012 on State aid SA.22668 (C 8/08 (ex NN 4/08)) (notified under document C(2012) 3025) (Only the Spanish text is authentic) (Text with EEA relevance) (2013/126/EU)",
  "legislation_url": "https://openlegislation.uk/eu-decision-2013-126",
  "path": "annex/I/division/2",
  "kind": "division",
  "number": null,
  "heading": "The Cost of Equity Capital",
  "text": "The cost of equity capital is the minimum required rate of return CDL must offer to its shareholders to compensate them for:\nthe time value of money;\nthe risk associated with investing in CDL.\nIt is important to stress that the relevant rate of return is an expected future return, not a historical return. The cost of equity capital reflects the opportunity cost of investment for shareholders in companies or projects with the same (or similar) business and financial risk as the one under consideration.\nIn what follows, we apply a widely accepted method of estimating the cost of equity capital, namely the Capital Asset Pricing Model (CAPM):\nK e = R f + β R m – R f\nWhere:\nKe the cost of equity capital, expressed in %;\nRf is the risk-free rate, expressed in %;\n(Rm – Rf) is the market risk premium, expressed in %;\nβ is the ‘Beta’, a measure of the systematic (non-diversifiable) risk associated with CDL’s stock, which reflects both the business and financial risk.\nFor the risk-free rate, market practice suggests taking the long-term (typically 10-year) government bond rate in the country of operations.\nFor the market risk premium, one should take the historical market risk premium over a reasonably long time period. It is common market practice to take the difference between the historical return on a diversified equity index in the country of operations, and the risk-free rate.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "footnote",
      "label": "f1",
      "text": "The appendix provides the general definition of the weighted average cost of capital (WACC), which includes both equity and debt."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/eudn/2013/126/annex/I/division/2",
    "retrieved_at": "2026-11-01T15:15:08.984307+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}