The WACC of Alchemist Realty Ltd (532114.BO) is 9.6%.
| Range | Selected | |
| Cost of equity | 62.70% - 89.10% | 75.90% |
| Tax rate | 0.40% - 1.10% | 0.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.8% - 10.5% | 9.6% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 6.72 | 8.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 62.70% | 89.10% |
| Tax rate | 0.40% | 1.10% |
| Debt/Equity ratio | 14.23 | 14.23 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.8% | 10.5% |
| Selected WACC | 9.6% | |
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 532114.BO:
cost_of_equity (75.90%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (6.72) + 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.