The WACC of APM Finvest Ltd (542774.BO) is 12.0%.
| Range | Selected | |
| Cost of equity | 11.20% - 14.80% | 13.00% |
| Tax rate | 13.00% - 14.00% | 13.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.4% - 13.5% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 7.2% | 7.7% |
| Equity market risk premium | 8.8% | 9.8% |
| Adjusted beta | 0.46 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.20% | 14.80% |
| Tax rate | 13.00% | 14.00% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.4% | 13.5% |
| Selected WACC | 12.0% | |
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 542774.BO:
cost_of_equity (13.00%) = risk_free_rate (7.45%) + equity_risk_premium (9.30%) * adjusted_beta (0.46) + 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.