The WACC of Bumi Resources Tbk PT (BUMI.JK) is 10.8%.
| Range | Selected | |
| Cost of equity | 10.50% - 13.50% | 12.00% |
| Tax rate | 20.60% - 23.20% | 21.90% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 9.4% - 12.3% | 10.8% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.49 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.50% | 13.50% |
| Tax rate | 20.60% | 23.20% |
| Debt/Equity ratio | 0.18 | 0.18 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 9.4% | 12.3% |
| Selected WACC | 10.8% | |
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 BUMI.JK:
cost_of_equity (12.00%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.49) + 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.