520073.BO WACC - Weighted Average Cost of Capital

The WACC of RACL Geartech Ltd (520073.BO) is 14.3%.

The Cost of Equity of RACL Geartech Ltd (520073.BO) is 16.25%.

The Cost of Debt of RACL Geartech Ltd (520073.BO) is 10.80%.

	Range	Selected
Cost of equity	14.20% - 18.30%	16.25%
Tax rate	24.80% - 26.60%	25.70%
Cost of debt	10.00% - 11.60%	10.80%
WACC	12.6% - 15.9%	14.3%

WACC

520073.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.88	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.20%	18.30%

Tax rate	24.80%	26.60%
Debt/Equity ratio	0.32	0.32
Cost of debt	10.00%	11.60%

After-tax WACC	12.6%	15.9%


Selected WACC	14.3%

520073.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 520073.BO:

cost_of_equity (16.25%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.88) + 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.