The WACC of Aldrees Petroleum and Transport Services Company SJSC (4200.SR) is 9.8%.
| Range | Selected | |
| Cost of equity | 9.30% - 12.30% | 10.80% |
| Tax rate | 2.50% - 2.80% | 2.65% |
| Cost of debt | 4.00% - 9.50% | 6.75% |
| WACC | 8.0% - 11.6% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.55 | 0.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.30% | 12.30% |
| Tax rate | 2.50% | 2.80% |
| Debt/Equity ratio | 0.33 | 0.33 |
| Cost of debt | 4.00% | 9.50% |
| After-tax WACC | 8.0% | 11.6% |
| Selected WACC | 9.8% | |
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 4200.SR:
cost_of_equity (10.80%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (0.55) + 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.