The WACC of Astra Otoparts Tbk PT (AUTO.JK) is 11.7%.
| Range | Selected | |
| Cost of equity | 10.80% - 13.50% | 12.15% |
| Tax rate | 14.10% - 15.30% | 14.70% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.5% - 12.9% | 11.7% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.53 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.80% | 13.50% |
| Tax rate | 14.10% | 15.30% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.5% | 12.9% |
| Selected WACC | 11.7% | |
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 AUTO.JK:
cost_of_equity (12.15%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.53) + 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.