531694.BO WACC - Weighted Average Cost of Capital

The WACC of Rainbow Foundations Ltd (531694.BO) is 9.3%.

The Cost of Equity of Rainbow Foundations Ltd (531694.BO) is 12.30%.

The Cost of Debt of Rainbow Foundations Ltd (531694.BO) is 10.50%.

	Range	Selected
Cost of equity	10.80% - 13.80%	12.30%
Tax rate	26.20% - 26.70%	26.45%
Cost of debt	5.60% - 15.40%	10.50%
WACC	6.4% - 12.1%	9.3%

WACC

531694.BO WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.48	0.63

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.80%	13.80%

Tax rate	26.20%	26.70%
Debt/Equity ratio	1.97	1.97
Cost of debt	5.60%	15.40%

After-tax WACC	6.4%	12.1%


Selected WACC	9.3%

531694.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 531694.BO:

cost_of_equity (12.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.48) + 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.