The WACC of Development Works Food Co CJSC (9501.SR) is 9.5%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.70% | 9.85% |
| Tax rate | 3.70% - 4.80% | 4.25% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.8% - 11.2% | 9.5% |
| Category | Low | High |
| Long-term bond rate | 5.4% | 5.9% |
| Equity market risk premium | 5.4% | 6.4% |
| Adjusted beta | 0.49 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.70% |
| Tax rate | 3.70% | 4.80% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.8% | 11.2% |
| Selected WACC | 9.5% | |
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 9501.SR:
cost_of_equity (9.85%) = risk_free_rate (5.65%) + equity_risk_premium (5.90%) * 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.