The WACC of Thomson Medical Group Ltd (A50.SI) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.00% - 12.60% | 9.80% |
| Tax rate | 22.60% - 29.50% | 26.05% |
| Cost of debt | 4.60% - 14.50% | 9.55% |
| WACC | 5.2% - 11.4% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.83 | 1.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 12.60% |
| Tax rate | 22.60% | 29.50% |
| Debt/Equity ratio | 1.01 | 1.01 |
| Cost of debt | 4.60% | 14.50% |
| After-tax WACC | 5.2% | 11.4% |
| Selected WACC | 8.3% | |
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 A50.SI:
cost_of_equity (9.80%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.83) + 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.