The WACC of Baid Leasing and Finance Co Ltd (511724.BO) is 8.5%.
| Range | Selected | |
| Cost of equity | 9.60% - 11.60% | 10.60% |
| Tax rate | 27.00% - 27.50% | 27.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.8% - 9.2% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 7.4% | 7.9% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.31 | 0.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 11.60% |
| Tax rate | 27.00% | 27.50% |
| Debt/Equity ratio | 0.44 | 0.44 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.8% | 9.2% |
| Selected WACC | 8.5% | |
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 511724.BO:
cost_of_equity (10.60%) = risk_free_rate (7.65%) + equity_risk_premium (7.40%) * adjusted_beta (0.31) + 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.