The WACC of BuilderSmart PCL (BSM.BK) is 12.1%.
| Range | Selected | |
| Cost of equity | 20.20% - 26.10% | 23.15% |
| Tax rate | 12.50% - 17.50% | 15.00% |
| Cost of debt | 4.60% - 19.60% | 12.10% |
| WACC | 6.6% - 17.7% | 12.1% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 2.37 | 2.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 20.20% | 26.10% |
| Tax rate | 12.50% | 17.50% |
| Debt/Equity ratio | 5.37 | 5.37 |
| Cost of debt | 4.60% | 19.60% |
| After-tax WACC | 6.6% | 17.7% |
| Selected WACC | 12.1% | |
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 (23.15%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (2.37) + 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.