The WACC of Amira Nature Foods Ltd (ANFIF) is 8.2%.
| Range | Selected | |
| Cost of equity | 5.00% - 5,794.60% | 2,899.80% |
| Tax rate | 12.90% - 13.30% | 13.10% |
| Cost of debt | 7.00% - 11.70% | 9.35% |
| WACC | 6.1% - 10.2% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -98.55 | 952.71 |
| Additional risk adjustments | 454.5% | 455.0% |
| Cost of equity | 5.00% | 5,794.60% |
| Tax rate | 12.90% | 13.30% |
| Debt/Equity ratio | 78972.08 | 78972.08 |
| Cost of debt | 7.00% | 11.70% |
| After-tax WACC | 6.1% | 10.2% |
| Selected WACC | 8.2% | |
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 ANFIF:
cost_of_equity (2,899.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-98.55) + risk_adjustments (454.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.