The WACC of Careplus Group Bhd (CAREPLS.KL) is 7.2%.
| Range | Selected | |
| Cost of equity | 5.10% - 9.20% | 7.15% |
| Tax rate | 3.00% - 9.50% | 6.25% |
| Cost of debt | 7.00% - 8.70% | 7.85% |
| WACC | 5.6% - 8.8% | 7.2% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.25 | 0.18 |
| Additional risk adjustments | 3.0% | 3.5% |
| Cost of equity | 5.10% | 9.20% |
| Tax rate | 3.00% | 9.50% |
| Debt/Equity ratio | 0.49 | 0.49 |
| Cost of debt | 7.00% | 8.70% |
| After-tax WACC | 5.6% | 8.8% |
| Selected WACC | 7.2% | |
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 CAREPLS.KL:
cost_of_equity (7.15%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.25) + risk_adjustments (3.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.