The WACC of Darco Water Technologies Ltd (BLR.SI) is 5.3%.
| Range | Selected | |
| Cost of equity | 5.20% - 8.40% | 6.80% |
| Tax rate | 14.00% - 23.90% | 18.95% |
| Cost of debt | 4.20% - 4.60% | 4.40% |
| WACC | 4.4% - 6.1% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.48 | 0.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.20% | 8.40% |
| Tax rate | 14.00% | 23.90% |
| Debt/Equity ratio | 0.9 | 0.9 |
| Cost of debt | 4.20% | 4.60% |
| After-tax WACC | 4.4% | 6.1% |
| Selected WACC | 5.3% | |
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 BLR.SI:
cost_of_equity (6.80%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.48) + 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.