The WACC of Avi Tech Electronics Ltd (BKY.SI) is 9.0%.
| Range | Selected | |
| Cost of equity | 7.00% - 11.10% | 9.05% |
| Tax rate | 14.40% - 15.60% | 15.00% |
| Cost of debt | 4.00% - 14.50% | 9.25% |
| WACC | 6.9% - 11.1% | 9.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.86 | 1.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.00% | 11.10% |
| Tax rate | 14.40% | 15.60% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 4.00% | 14.50% |
| After-tax WACC | 6.9% | 11.1% |
| Selected WACC | 9.0% | |
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 BKY.SI:
cost_of_equity (9.05%) = risk_free_rate (3.15%) + equity_risk_premium (5.20%) * adjusted_beta (0.86) + 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.