The WACC of Simmonds Marshall Ltd (507998.BO) is 16.8%.
| Range | Selected | |
| Cost of equity | 19.10% - 22.10% | 20.60% |
| Tax rate | 0.80% - 1.70% | 1.25% |
| Cost of debt | 10.90% - 12.10% | 11.50% |
| WACC | 15.7% - 17.9% | 16.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.47 | 1.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 19.10% | 22.10% |
| Tax rate | 0.80% | 1.70% |
| Debt/Equity ratio | 0.68 | 0.68 |
| Cost of debt | 10.90% | 12.10% |
| After-tax WACC | 15.7% | 17.9% |
| Selected WACC | 16.8% | |
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 507998.BO:
cost_of_equity (20.60%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.47) + 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.