AFHL.TA WACC - Weighted Average Cost of Capital

The WACC of Afcon Holdings Ltd (AFHL.TA) is 6.6%.

The Cost of Equity of Afcon Holdings Ltd (AFHL.TA) is 8.60%.

The Cost of Debt of Afcon Holdings Ltd (AFHL.TA) is 5.50%.

	Range	Selected
Cost of equity	7.10% - 10.10%	8.60%
Tax rate	24.00% - 39.10%	31.55%
Cost of debt	4.00% - 7.00%	5.50%
WACC	5.5% - 7.7%	6.6%

WACC

AFHL.TA WACC calculation

Category	Low	High

Long-term bond rate	4.8%	5.3%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.38	0.59

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	10.10%

Tax rate	24.00%	39.10%
Debt/Equity ratio	0.69	0.69
Cost of debt	4.00%	7.00%

After-tax WACC	5.5%	7.7%


Selected WACC	6.6%

AFHL.TA'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 AFHL.TA:

cost_of_equity (8.60%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.38) + 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.