The WACC of World Precision Machinery Ltd (B49.SI) is 15.1%.
| Range | Selected | |
| Cost of equity | 7.40% - 15.20% | 11.30% |
| Tax rate | 16.00% - 26.00% | 21.00% |
| Cost of debt | 7.00% - 45.40% | 26.20% |
| WACC | 6.7% - 23.4% | 15.1% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.92 | 1.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.40% | 15.20% |
| Tax rate | 16.00% | 26.00% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 7.00% | 45.40% |
| After-tax WACC | 6.7% | 23.4% |
| Selected WACC | 15.1% | |
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 B49.SI:
cost_of_equity (11.30%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.92) + 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.