The WACC of Capitaland Ltd (C31.SI) is 6.1%.
| Range | Selected | |
| Cost of equity | 7.70% - 10.30% | 9.00% |
| Tax rate | 19.10% - 20.00% | 19.55% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.9% - 7.3% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 1.02 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 10.30% |
| Tax rate | 19.10% | 20.00% |
| Debt/Equity ratio | 1.69 | 1.69 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.9% | 7.3% |
| Selected WACC | 6.1% | |
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 C31.SI:
cost_of_equity (9.00%) = risk_free_rate (3.15%) + equity_risk_premium (5.20%) * adjusted_beta (1.02) + 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.