The WACC of Saudi Arabian Cooperative Insurance Company SJSC (8100.SR) is 10.7%.
| Range | Selected | |
| Cost of equity | 15.10% - 18.90% | 17.00% |
| Tax rate | 11.40% - 13.00% | 12.20% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 9.8% - 11.6% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.5 | 1.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.10% | 18.90% |
| Tax rate | 11.40% | 13.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 9.8% | 11.6% |
| Selected WACC | 10.7% | |
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 8100.SR:
cost_of_equity (17.00%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (1.5) + 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.