The WACC of Aamal Company QPSC (AHCS.QA) is 11.0%.
| Range | Selected | |
| Cost of equity | 10.20% - 12.70% | 11.45% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 5.30% - 5.60% | 5.45% |
| WACC | 9.8% - 12.1% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.86 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 12.70% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 5.30% | 5.60% |
| After-tax WACC | 9.8% | 12.1% |
| Selected WACC | 11.0% | |
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 AHCS.QA:
cost_of_equity (11.45%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.86) + 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.