The WACC of Eco Recycling Ltd (530643.BO) is 13.8%.
| Range | Selected | |
| Cost of equity | 12.40% - 16.10% | 14.25% |
| Tax rate | 10.00% - 14.20% | 12.10% |
| Cost of debt | 4.70% - 8.20% | 6.45% |
| WACC | 11.9% - 15.6% | 13.8% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.7 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.40% | 16.10% |
| Tax rate | 10.00% | 14.20% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 4.70% | 8.20% |
| After-tax WACC | 11.9% | 15.6% |
| Selected WACC | 13.8% | |
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 530643.BO:
cost_of_equity (14.25%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.7) + 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.