1H2.SI WACC - Weighted Average Cost of Capital

The WACC of Olive Tree Estates Ltd (1H2.SI) is 5.2%.

The Cost of Equity of Olive Tree Estates Ltd (1H2.SI) is 5.35%.

The Cost of Debt of Olive Tree Estates Ltd (1H2.SI) is 5.50%.

	Range	Selected
Cost of equity	4.60% - 6.10%	5.35%
Tax rate	8.40% - 10.00%	9.20%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.3% - 6.2%	5.2%

WACC

1H2.SI WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.36	0.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	4.60%	6.10%

Tax rate	8.40%	10.00%
Debt/Equity ratio	0.5	0.5
Cost of debt	4.00%	7.00%

After-tax WACC	4.3%	6.2%


Selected WACC	5.2%

1H2.SI's CAPM model and how its cost of Equity is calculated

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 1H2.SI:

cost_of_equity (5.35%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.36) + 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.