The WACC of Sandur Manganese and Iron Ores Ltd (504918.BO) is 15.5%.
| Range | Selected | |
| Cost of equity | 13.80% - 18.60% | 16.20% |
| Tax rate | 25.60% - 29.40% | 27.50% |
| Cost of debt | 8.00% - 8.00% | 8.00% |
| WACC | 13.3% - 17.8% | 15.5% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.75 | 1.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.80% | 18.60% |
| Tax rate | 25.60% | 29.40% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 8.00% | 8.00% |
| After-tax WACC | 13.3% | 17.8% |
| Selected WACC | 15.5% | |
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 504918.BO:
cost_of_equity (16.20%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (0.75) + 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.