The WACC of SinoCloud Group Ltd (5EK.SI) is 5.2%.
| Range | Selected | |
| Cost of equity | 4.80% - 9.00% | 6.90% |
| Tax rate | 17.00% - 17.00% | 17.00% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.7% - 6.7% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.5% | 6.5% |
| Adjusted beta | 0.31 | 0.75 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.80% | 9.00% |
| Tax rate | 17.00% | 17.00% |
| Debt/Equity ratio | 2.54 | 2.54 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.7% | 6.7% |
| Selected WACC | 5.2% | |
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 5EK.SI:
cost_of_equity (6.90%) = risk_free_rate (3.45%) + equity_risk_premium (6.00%) * adjusted_beta (0.31) + 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.