The WACC of Al-Salam Real Estate Investment Trust (ALSREIT.KL) is 9.8%.
| Range | Selected | |
| Cost of equity | 8.00% - 10.30% | 9.15% |
| Tax rate | 0.90% - 2.30% | 1.60% |
| Cost of debt | 4.80% - 15.60% | 10.20% |
| WACC | 5.5% - 14.0% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.62 | 0.7 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 10.30% |
| Tax rate | 0.90% | 2.30% |
| Debt/Equity ratio | 3.06 | 3.06 |
| Cost of debt | 4.80% | 15.60% |
| After-tax WACC | 5.5% | 14.0% |
| Selected WACC | 9.8% | |
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 ALSREIT.KL:
cost_of_equity (9.15%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.62) + 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.