The WACC of Airport City Ltd (ARPT.TA) is 8.9%.
| Range | Selected | |
| Cost of equity | 11.80% - 15.10% | 13.45% |
| Tax rate | 21.80% - 25.10% | 23.45% |
| Cost of debt | 4.00% - 5.90% | 4.95% |
| WACC | 7.7% - 10.0% | 8.9% |
| Category | Low | High |
| Long-term bond rate | 4.8% | 5.3% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.14 | 1.31 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.80% | 15.10% |
| Tax rate | 21.80% | 25.10% |
| Debt/Equity ratio | 0.91 | 0.91 |
| Cost of debt | 4.00% | 5.90% |
| After-tax WACC | 7.7% | 10.0% |
| Selected WACC | 8.9% | |
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 ARPT.TA:
cost_of_equity (13.45%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (1.14) + 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.