Cost of Capital Cost of capital represents the minimum rate of return that must be earned by invested capital in order to create value. The weighted average cost of capital (WACC) is calculated in order to simulate an adequate market rate of return. The cost of capital is calculated as the weighted average of the cost of equity and  borrowed capital.  Calculation of Weighted Average Capital Costs (WACC) Continued Value Increase The sustained positive development is also evidenced in PUMA’s value increase.  As a result of the successful year 2004, gross cashflow (after tax) rose from  € 201.4 million to € 279.6 million, an increase of 38.8%.  Gross investment increased 41.4%, from  € 463.3 million to € 655.1 million, while  net liquidity rose from € 114.9 million to  € 272.1 million, or by 136.9%.  The cashflow return on investment (CFROI) in 2004 was 42.7% compared to 43.5% in the previous year. In consideration of the cost of capital, the absolute value contribution, i.e., the economic value added, rose to € 222.3  million (previous year: € 166.3 million). Prior years were adjusted according to the new methodology 2004 2003 2002 2001 2000 Riskfree interest rate 4.3% 4.3% 4.3% 4.9% 4.9% Market premium 5.0% 5.0% 5.0% 5.0% 5.0% Beta (M-DAX, 24 month) 0.9 0.7 1.0 0.9 0.9 Cost of stockholders’ equity 8.8% 7.6% 9.3% 9.4% 9.4% Riskfree interest rate 4.3% 4.3% 4.3% 4.9% 4.9% Credit risk premium 3.0% 3.0% 3.0% 3.0% 3.0% Tax shield 30.5% 31.9% 32.0% 30.1% 30.1% Cost of liabilities after tax 5.0% 4.9% 5.0% 5.6% 5.6% Calculation Market capitalization 3,249 2,248 1,030 524 195 Share of equity 100.0% 99.0% 93.7% 79.5% 61.3% Calculated liabilities 0 22 69 135 123 Share of liabilities 0.0% 1.0% 6.3% 20.4% 38.5% WACC after tax 8.7% 7.6% 9.0% 8.6% 7.9% Foreword | Mission |  Management Report  | Share | Marketing | Consolidated Financial Statements - IFRS - | Report of Supervisory Board | Board of Management 29 2000 2001 2002 2003 2004 Absolute value  contribution (million €) 0 50 100 150 200 250