The WACC of Afarak Group Plc (AFAGR.HE) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.00% - 9.20% | 8.10% |
| Tax rate | 15.80% - 24.40% | 20.10% |
| Cost of debt | 7.00% - 26.10% | 16.55% |
| WACC | 7.0% - 9.6% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.7% | 6.7% |
| Adjusted beta | 0.75 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 9.20% |
| Tax rate | 15.80% | 24.40% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 7.00% | 26.10% |
| After-tax WACC | 7.0% | 9.6% |
| 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 AFAGR.HE:
cost_of_equity (8.10%) = risk_free_rate (2.95%) + equity_risk_premium (6.20%) * adjusted_beta (0.75) + 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.