507621.BO WACC - Weighted Average Cost of Capital

The WACC of Milk Food Ltd (507621.BO) is 12.1%.

The Cost of Equity of Milk Food Ltd (507621.BO) is 14.75%.

The Cost of Debt of Milk Food Ltd (507621.BO) is 9.40%.

	Range	Selected
Cost of equity	13.50% - 16.00%	14.75%
Tax rate	17.60% - 21.60%	19.60%
Cost of debt	6.70% - 12.10%	9.40%
WACC	10.6% - 13.6%	12.1%

WACC

507621.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.8	0.88

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.50%	16.00%

Tax rate	17.60%	21.60%
Debt/Equity ratio	0.57	0.57
Cost of debt	6.70%	12.10%

After-tax WACC	10.6%	13.6%


Selected WACC	12.1%

507621.BO'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 507621.BO:

cost_of_equity (14.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.8) + 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.