In the 21st edition of our Cost of Capital Study, titled “The Discount Rate Puzzle: Navigating between Cost of Capital, Alphas and Premiums,” we analyze current developments in the cost of capital and valuation parameters in the DACH region. The study focuses on the impact of declining risk premiums combined with higher interest rates, current questions on developments in the economic environment and capital markets, and the implications of the Discount Rate Puzzle for valuation practice. It also takes an in-depth look at alphas and premiums, including the country risk premium.
An overview of the key articles
Cost of capital parameters 2026
WACC
Beta factor
Total return
Cost of equity
Cost of debt
Debt ratio
WACC
In the current reporting period, participating companies applied weighted average cost of capital (WACC) rates ranging from 5.3 percent to 10.6 percent. The overall average WACC across all industries stands at 7.9 percent, reflecting a decrease compared to the previous year’s figure of 8.5 percent.
Comparatively high average WACC values were reported in the Technology (9.4 percent), Industrial Manufacturing (8.7 percent) and Real Estate (8.4 percent) sectors. In contrast, the Energy & Natural Resources sector recorded the lowest average WACC at 6.5 percent, with Media & Telecommunications following at 7.0 percent.
You can find more details in the current study.
Beta factor
During the survey period, the levered beta factors of all participating companies ranged from 0.71 to 1.29, with an average of 0.99—below the previous year’s figure of 1.03.
The highest average levered beta values were observed in the Automotive sector (1.19), followed by Technology (1.14) and Real Estate (1.11). In contrast, the Energy & Natural Resources (0.81), Transport & Leisure (0.85) as well as Chemicals & Pharmaceuticals and Media & Telecommunications (0.90 each) sectors reported the lowest average levered beta factors.
You can find more details in the current study.
Total return
During the survey period, participating companies applied a risk-free rate of 3.2 percent in Germany and 3.3 percent in Austria (previous year: 2.5 percent each). In Switzerland, the average risk-free rate applied decreased to 1.6 percent (previous year: 2.6 percent).
Compared with the previous year, the average market risk premium applied by participating companies declined by 1.0 percentage points to 5.7 percent in Germany and by 1.1 percentage points to 5.6 percent in Austria. In Switzerland, the market risk premium decreased by 0.1 percentage points to 5.9 percent.
Based on these figures, the average expected total return during the survey period amounts to 8.9 percent in Germany and Austria and 7.6 percent in Switzerland.
You can find more details in the current study.
Cost of equity
During the survey period, the levered cost of equity reported by participating companies ranged from 7.3 percent to 12.7 percent, with a cross-industry average of 9.1 percent—below the previous year’s figure of 9.7 percent.
The highest average levered cost of equity was observed in the Real Estate sector at 10.7 percent, followed by Automotive at 10.3 percent. In contrast, the Energy & Natural Resources sector recorded the lowest average at 8.1 percent, followed by Transport & Leisure, Media & Telecommunications and Consumer Markets at 8.4 percent each.
You can find more details in the current study.
Cost of debt
The cost of debt reported by participating companies during the survey period ranged across industries from 3.6 percent to 6.0 percent. On average, the applied cost of debt was 4.7 percent, representing an increase of 0.4 percentage points compared to the previous year.
The highest average cost of debt was recorded in the Chemicals & Pharmaceuticals sector at 5.4 percent, while the Energy & Natural Resources (4.0 percent) and Technology (4.1 percent) sectors reported the lowest average values.
You can find more details in the current study.
Debt ratio
The debt ratios reported by participating companies vary significantly across industries, ranging from 4.8 percent to 52.8 percent. Across all sectors, the average debt ratio stands at 23.5 percent, unchanged from the previous year.
The Energy & Natural Resources sector recorded the highest average debt ratio at 36.2 percent, closely followed by Real Estate (35.4 percent) and Media & Telecommunications (35.3 percent), while the Technology sector reported the lowest at 16.5 percent. The relatively high debt ratios in these sectors can likely be attributed to their substantial capital investment requirements.
You can find more details in the current study.
Impairment Test
Download now: KPMG cost of capital study 2026
About the cost of capital study
The KPMG Cost of Capital Study is an annual empirical investigation that provides insights into how current economic developments affect the business models, financial projections and long-term return expectations (cost of capital) of companies in the DACH region. The study’s wide reach each year underlines the significant practical value it offers to companies.
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Previous issues of the cost of capital study
Your contacts
Dr. Andreas Tschöpel
Partner, Deals & Performance, Valuation
KPMG AG Wirtschaftsprüfungsgesellschaft
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