The WACC of BuilderSmart PCL (BSM.BK) is 12.3%.
| Range | Selected | |
| Cost of equity | 20.20% - 29.30% | 24.75% |
| Tax rate | 12.50% - 17.50% | 15.00% |
| Cost of debt | 4.60% - 19.60% | 12.10% |
| WACC | 6.5% - 18.1% | 12.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 2.38 | 3.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.20% | 29.30% |
| Tax rate | 12.50% | 17.50% |
| Debt/Equity ratio | 5.69 | 5.69 |
| Cost of debt | 4.60% | 19.60% |
| After-tax WACC | 6.5% | 18.1% |
| Selected WACC | 12.3% | |
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 BSM.BK:
cost_of_equity (24.75%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (2.38) + 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.