The WACC of Box-Pak (Malaysia) Bhd (BOXPAK.KL) is 8.0%.
| Range | Selected | |
| Cost of equity | 4.10% - 11.00% | 7.55% |
| Tax rate | 24.00% - 24.00% | 24.00% |
| Cost of debt | 5.70% - 15.60% | 10.65% |
| WACC | 4.3% - 11.8% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.46 | 0.34 |
| Additional risk adjustments | 3.5% | 4.0% |
| Cost of equity | 4.10% | 11.00% |
| Tax rate | 24.00% | 24.00% |
| Debt/Equity ratio | 10.12 | 10.12 |
| Cost of debt | 5.70% | 15.60% |
| After-tax WACC | 4.3% | 11.8% |
| 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 BOXPAK.KL:
cost_of_equity (7.55%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.46) + risk_adjustments (3.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.