The WACC of Tri Banyan Tirta Tbk PT (ALTO.JK) is 7.2%.
| Range | Selected | |
| Cost of equity | 14.50% - 18.70% | 16.60% |
| Tax rate | 21.40% - 27.20% | 24.30% |
| Cost of debt | 4.00% - 7.70% | 5.85% |
| WACC | 5.7% - 8.6% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 1 | 1.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.50% | 18.70% |
| Tax rate | 21.40% | 27.20% |
| Debt/Equity ratio | 3.38 | 3.38 |
| Cost of debt | 4.00% | 7.70% |
| After-tax WACC | 5.7% | 8.6% |
| Selected WACC | 7.2% | |
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 ALTO.JK:
cost_of_equity (16.60%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1) + 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.