AAIF.L WACC - Weighted Average Cost of Capital

The WACC of Aberdeen Asian Income Fund Ltd (AAIF.L) is 9.7%.

The Cost of Equity of Aberdeen Asian Income Fund Ltd (AAIF.L) is 10.40%.

The Cost of Debt of Aberdeen Asian Income Fund Ltd (AAIF.L) is 4.30%.

	Range	Selected
Cost of equity	9.10% - 11.70%	10.40%
Tax rate	6.30% - 7.10%	6.70%
Cost of debt	4.00% - 4.60%	4.30%
WACC	8.5% - 10.9%	9.7%

WACC

AAIF.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.85	0.95

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.70%

Tax rate	6.30%	7.10%
Debt/Equity ratio	0.11	0.11
Cost of debt	4.00%	4.60%

After-tax WACC	8.5%	10.9%


Selected WACC	9.7%

AAIF.L's CAPM model and how its cost of Equity is calculated

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 AAIF.L:

cost_of_equity (10.40%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.85) + 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.