The WACC of Banque Saudi Fransi SJSC (1050.SR) is 8.3%.
| Range | Selected | |
| Cost of equity | 12.70% - 18.70% | 15.70% |
| Tax rate | 10.30% - 10.50% | 10.40% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.3% - 9.4% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.11 | 1.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.70% | 18.70% |
| Tax rate | 10.30% | 10.50% |
| Debt/Equity ratio | 1.9 | 1.9 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.3% | 9.4% |
| Selected WACC | 8.3% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 1050.SR:
cost_of_equity (15.70%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (1.11) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.