The WACC of Modison Metals Ltd (506261.BO) is 14.2%.
| Range | Selected | |
| Cost of equity | 14.20% - 16.60% | 15.40% |
| Tax rate | 31.20% - 33.20% | 32.20% |
| Cost of debt | 8.20% - 10.80% | 9.50% |
| WACC | 13.0% - 15.4% | 14.2% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.96 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.20% | 16.60% |
| Tax rate | 31.20% | 33.20% |
| Debt/Equity ratio | 0.15 | 0.15 |
| Cost of debt | 8.20% | 10.80% |
| After-tax WACC | 13.0% | 15.4% |
| Selected WACC | 14.2% | |
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 506261.BO:
cost_of_equity (15.40%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.96) + 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.