The WACC of Lancor Holdings Ltd (509048.BO) is 12.8%.
| Range | Selected | |
| Cost of equity | 11.10% - 14.90% | 13.00% |
| Tax rate | 21.60% - 32.10% | 26.85% |
| Cost of debt | 13.00% - 21.10% | 17.05% |
| WACC | 10.9% - 14.7% | 12.8% |
| Category | Low | High |
| Long-term bond rate | 7.1% | 7.6% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.48 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.10% | 14.90% |
| Tax rate | 21.60% | 32.10% |
| Debt/Equity ratio | 0.34 | 0.34 |
| Cost of debt | 13.00% | 21.10% |
| After-tax WACC | 10.9% | 14.7% |
| Selected WACC | 12.8% | |
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 509048.BO:
cost_of_equity (13.00%) = risk_free_rate (7.35%) + equity_risk_premium (8.80%) * adjusted_beta (0.48) + 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.