The WACC of Best SA (BST.WA) is 9.4%.
| Range | Selected | |
| Cost of equity | 9.00% - 13.20% | 11.10% |
| Tax rate | 8.40% - 11.70% | 10.05% |
| Cost of debt | 8.40% - 9.10% | 8.75% |
| WACC | 8.3% - 10.5% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.56 | 0.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.00% | 13.20% |
| Tax rate | 8.40% | 11.70% |
| Debt/Equity ratio | 1.14 | 1.14 |
| Cost of debt | 8.40% | 9.10% |
| After-tax WACC | 8.3% | 10.5% |
| Selected WACC | 9.4% | |
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 BST.WA:
cost_of_equity (11.10%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.56) + 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.