The WACC of Binakarya Jaya Abadi Tbk PT (BIKA.JK) is 5.2%.
| Range | Selected | |
| Cost of equity | 5.40% - 23.00% | 14.20% |
| Tax rate | 0.40% - 0.40% | 0.40% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 5.5% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | -0.98 | 1 |
| Additional risk adjustments | 6.5% | 7.0% |
| Cost of equity | 5.40% | 23.00% |
| Tax rate | 0.40% | 0.40% |
| Debt/Equity ratio | 36.97 | 36.97 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 5.5% |
| Selected WACC | 5.2% | |
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 BIKA.JK:
cost_of_equity (14.20%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (-0.98) + risk_adjustments (6.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.