The WACC of A F Enterprises Ltd (538351.BO) is 10.3%.
| Range | Selected | |
| Cost of equity | 10.90% - 14.60% | 12.75% |
| Tax rate | 33.80% - 45.30% | 39.55% |
| Cost of debt | 4.00% - 7.50% | 5.75% |
| WACC | 8.7% - 11.9% | 10.3% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.49 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.90% | 14.60% |
| Tax rate | 33.80% | 45.30% |
| Debt/Equity ratio | 0.35 | 0.35 |
| Cost of debt | 4.00% | 7.50% |
| After-tax WACC | 8.7% | 11.9% |
| Selected WACC | 10.3% | |
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 538351.BO:
cost_of_equity (12.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.49) + 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.