AUTOMOTIVE STUDY 2025 / Šaroch (ed.) et al.

equity was rst calculated for the assumption of zero debt (i.e., unlevered cost of equity) using the following relationship:

Where: c E(U)

is the unlevered cost of equity is the risk-free rate of return is the beta coe cient unlevered

r f

β U

MRP CRP

is the developed capital market risk premium

is the country risk premium represents other premiums

op

e yield to maturity of Eurobonds issued by the European Central Bank was used to estimate the risk-free rate of return. For the purposes of determining the cost of equity, it is appropriate to use the yield to maturity of bonds with the longest maturity. For this purpose, the average annual yield to maturity of 30-year Eurobonds ( AAA-rated euro area central government bonds ) was used. e implied risk premium of the US capital market, based on free cash ows to owners ( Implied Premium, FCFE ), was used as the risk premium of the developed capital market. e beta coe cients for the automotive companies under review were derived using the analogy method, i.e., taking the beta coe cient from other companies. Due to the low reliability of the beta calculation for individual companies, the foreign betas for the industry at zero debt, as reported by Damodaran, were used as a starting point. Although the coe cients are calculated from foreign markets, it can be assumed that such data may be more reliable than the limited data calculated from the results of the stock markets in V4 countries. e relative riskiness of a given sector may not di er signi cantly between countries. Damodaran’s data on the unlevered betas of European companies in the Auto & Truck and Auto Parts sectors (in 2014 – 2023) were used to determine the beta coe cients for calculating the cost of equity of automotive companies (we worked with the weighted arithmetic average of unlevered betas). e country risk premium re ects the elevated level of risk in a given capital market. e size of the country risk premium was determined on the basis of the country rating by Moody’s and the speci c size of the risk premium was taken from the Damodaran database. e cost of equity is recalculated to the appropriate level of debt by the adjustment of beta coe cient. e following so-called “relevering” formula is used (see also Mařík et al., 2018):

Where: β L

is the beta coe cient levered is the beta coe cient unlevered

β U

t

is the e ective tax rate at the valuation date

D

is the market value of the interest-bearing debt invested in the company

E

is the market value of equity

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