The WACC of City Developments Ltd (C09.SI) is 7.9%.
| Range | Selected | |
| Cost of equity | 8.60% - 17.50% | 13.05% |
| Tax rate | 28.00% - 33.90% | 30.95% |
| Cost of debt | 4.00% - 14.50% | 9.25% |
| WACC | 4.3% - 11.6% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.16 | 2.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.60% | 17.50% |
| Tax rate | 28.00% | 33.90% |
| Debt/Equity ratio | 2.99 | 2.99 |
| Cost of debt | 4.00% | 14.50% |
| After-tax WACC | 4.3% | 11.6% |
| Selected WACC | 7.9% | |
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 C09.SI:
cost_of_equity (13.05%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (1.16) + 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.