The WACC of Astra Agro Lestari Tbk PT (AALI.JK) is 10.3%.
| Range | Selected | |
| Cost of equity | 13.50% - 20.80% | 17.15% |
| Tax rate | 28.40% - 29.60% | 29.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.5% - 12.1% | 10.3% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.87 | 1.48 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.50% | 20.80% |
| Tax rate | 28.40% | 29.60% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.5% | 12.1% |
| Selected WACC | 10.3% | |
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 AALI.JK:
cost_of_equity (17.15%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.87) + 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.