The WACC of Acknit Industries Ltd (530043.BO) is 9.7%.
| Range | Selected | |
| Cost of equity | 12.00% - 15.60% | 13.80% |
| Tax rate | 25.60% - 25.90% | 25.75% |
| Cost of debt | 5.80% - 7.50% | 6.65% |
| WACC | 8.4% - 10.9% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.62 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 15.60% |
| Tax rate | 25.60% | 25.90% |
| Debt/Equity ratio | 0.87 | 0.87 |
| Cost of debt | 5.80% | 7.50% |
| After-tax WACC | 8.4% | 10.9% |
| Selected WACC | 9.7% | |
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 530043.BO:
cost_of_equity (13.80%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.62) + 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.