ARANK.KL WACC - Weighted Average Cost of Capital

The WACC of A-Rank Bhd (ARANK.KL) is 9.8%.

The Cost of Equity of A-Rank Bhd (ARANK.KL) is 15.70%.

The Cost of Debt of A-Rank Bhd (ARANK.KL) is 6.05%.

	Range	Selected
Cost of equity	13.50% - 17.90%	15.70%
Tax rate	25.50% - 27.20%	26.35%
Cost of debt	6.00% - 6.10%	6.05%
WACC	8.8% - 10.8%	9.8%

WACC

ARANK.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	1.42	1.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.50%	17.90%

Tax rate	25.50%	27.20%
Debt/Equity ratio	1.11	1.11
Cost of debt	6.00%	6.10%

After-tax WACC	8.8%	10.8%


Selected WACC	9.8%

ARANK.KL's CAPM model and how its cost of Equity is calculated

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 ARANK.KL:

cost_of_equity (15.70%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.42) + 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.