The WACC of Rabigh Refining and Petrochemical Company SJSC (2380.SR) is 10.1%.
| Range | Selected | |
| Cost of equity | 20.60% - 25.80% | 23.20% |
| Tax rate | 3.40% - 4.30% | 3.85% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 8.4% - 11.9% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 2.4 | 2.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.60% | 25.80% |
| Tax rate | 3.40% | 4.30% |
| Debt/Equity ratio | 2.68 | 2.68 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 8.4% | 11.9% |
| Selected WACC | 10.1% | |
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 2380.SR:
cost_of_equity (23.20%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (2.4) + 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.