The WACC of ASL Marine Holdings Ltd (A04.SI) is 7.6%.
| Range | Selected | |
| Cost of equity | 17.00% - 27.00% | 22.00% |
| Tax rate | 11.80% - 27.70% | 19.75% |
| Cost of debt | 4.10% - 6.30% | 5.20% |
| WACC | 6.2% - 8.9% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 2.79 | 3.81 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.00% | 27.00% |
| Tax rate | 11.80% | 27.70% |
| Debt/Equity ratio | 4.16 | 4.16 |
| Cost of debt | 4.10% | 6.30% |
| After-tax WACC | 6.2% | 8.9% |
| Selected WACC | 7.6% | |
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 A04.SI:
cost_of_equity (22.00%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (2.79) + 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.