The WACC of Premier Synthetics Ltd (509835.BO) is 11.9%.
| Range | Selected | |
| Cost of equity | 15.60% - 19.30% | 17.45% |
| Tax rate | 1.90% - 11.80% | 6.85% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 10.4% - 13.4% | 11.9% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.05 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.60% | 19.30% |
| Tax rate | 1.90% | 11.80% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 10.4% | 13.4% |
| Selected WACC | 11.9% | |
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 509835.BO:
cost_of_equity (17.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.05) + 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.