The WACC of Al Khaleej Takaful Insurance Company QPSC (AKHI.QA) is 10.1%.
| Range | Selected | |
| Cost of equity | 8.50% - 11.80% | 10.15% |
| Tax rate | -% - -% | -% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.5% - 11.7% | 10.1% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.59 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.50% | 11.80% |
| Tax rate | -% | -% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.5% | 11.7% |
| Selected WACC | 10.1% | |
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 AKHI.QA:
cost_of_equity (10.15%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.59) + 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.