The WACC of BBI Development SA (BBD.WA) is 8.0%.
| Range | Selected | |
| Cost of equity | 10.50% - 14.90% | 12.70% |
| Tax rate | 6.80% - 13.30% | 10.05% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.2% - 8.8% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.79 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.50% | 14.90% |
| Tax rate | 6.80% | 13.30% |
| Debt/Equity ratio | 1.34 | 1.34 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.2% | 8.8% |
| Selected WACC | 8.0% | |
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 BBD.WA:
cost_of_equity (12.70%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.79) + 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.