The WACC of Burger King India Ltd (BURGERKING.NS) is 12.5%.
| Range | Selected | |
| Cost of equity | 12.20% - 15.20% | 13.70% |
| Tax rate | 30.00% - 31.80% | 30.90% |
| Cost of debt | 6.90% - 7.00% | 6.95% |
| WACC | 11.2% - 13.8% | 12.5% |
| Category | Low | High |
| Long-term bond rate | 7.5% | 8.0% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 0.68 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.20% | 15.20% |
| Tax rate | 30.00% | 31.80% |
| Debt/Equity ratio | 0.16 | 0.16 |
| Cost of debt | 6.90% | 7.00% |
| After-tax WACC | 11.2% | 13.8% |
| Selected WACC | 12.5% | |
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 BURGERKING.NS:
cost_of_equity (13.70%) = risk_free_rate (7.75%) + equity_risk_premium (7.40%) * adjusted_beta (0.68) + 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.