The WACC of Riyadh Cement Co (9512.SR) is 10.7%.
| Range | Selected | |
| Cost of equity | 9.60% - 11.80% | 10.70% |
| Tax rate | 2.90% - 3.80% | 3.35% |
| Cost of debt | 6.70% - 13.40% | 10.05% |
| WACC | 9.6% - 11.8% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.6% | 7.6% |
| Adjusted beta | 0.55 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 11.80% |
| Tax rate | 2.90% | 3.80% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 6.70% | 13.40% |
| After-tax WACC | 9.6% | 11.8% |
| 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 9512.SR:
cost_of_equity (10.70%) = risk_free_rate (6.15%) + equity_risk_premium (7.10%) * adjusted_beta (0.55) + 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.