The WACC of Race Eco Chain Ltd (537785.BO) is 11.8%.
| Range | Selected | |
| Cost of equity | 10.90% - 13.00% | 11.95% |
| Tax rate | 31.00% - 43.60% | 37.30% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.8% - 12.8% | 11.8% |
| Category | Low | High |
| Long-term bond rate | 7.4% | 7.9% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.5 | 0.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.90% | 13.00% |
| Tax rate | 31.00% | 43.60% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.8% | 12.8% |
| Selected WACC | 11.8% | |
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 537785.BO:
cost_of_equity (11.95%) = risk_free_rate (7.65%) + equity_risk_premium (7.40%) * adjusted_beta (0.5) + 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.