The WACC of P5 Capital Holdings Ltd (5AI.SI) is 6.0%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.50% | 6.85% |
| Tax rate | 17.00% - 17.00% | 17.00% |
| Cost of debt | 4.20% - 7.00% | 5.60% |
| WACC | 4.6% - 7.5% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.39 | 0.71 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.20% | 8.50% |
| Tax rate | 17.00% | 17.00% |
| Debt/Equity ratio | 0.59 | 0.59 |
| Cost of debt | 4.20% | 7.00% |
| After-tax WACC | 4.6% | 7.5% |
| Selected WACC | 6.0% | |
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 5AI.SI:
cost_of_equity (6.85%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.39) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.