The WACC of AQ Estate PCL (AQ.BK) is 10.9%.
| Range | Selected | |
| Cost of equity | 7.70% - 11.50% | 9.60% |
| Tax rate | 1.10% - 1.40% | 1.25% |
| Cost of debt | 4.20% - 107.70% | 55.95% |
| WACC | 7.6% - 14.2% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.64 | 0.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 11.50% |
| Tax rate | 1.10% | 1.40% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 4.20% | 107.70% |
| After-tax WACC | 7.6% | 14.2% |
| Selected WACC | 10.9% | |
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 AQ.BK:
cost_of_equity (9.60%) = risk_free_rate (2.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.64) + 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.