BUMI.JK WACC - Weighted Average Cost of Capital

The WACC of Bumi Resources Tbk PT (BUMI.JK) is 11.0%.

The Cost of Equity of Bumi Resources Tbk PT (BUMI.JK) is 12.05%.

The Cost of Debt of Bumi Resources Tbk PT (BUMI.JK) is 5.50%.

	Range	Selected
Cost of equity	10.50% - 13.60%	12.05%
Tax rate	20.60% - 23.20%	21.90%
Cost of debt	4.00% - 7.00%	5.50%
WACC	9.5% - 12.5%	11.0%

WACC

BUMI.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.49	0.67

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.50%	13.60%

Tax rate	20.60%	23.20%
Debt/Equity ratio	0.16	0.16
Cost of debt	4.00%	7.00%

After-tax WACC	9.5%	12.5%


Selected WACC	11.0%

BUMI.JK's CAPM model and how its cost of Equity is calculated

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 (12.05%) = 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.