The WACC of Careplus Group Bhd (CAREPLS.KL) is 7.4%.
| Range | Selected | |
| Cost of equity | 5.30% - 9.60% | 7.45% |
| Tax rate | 3.00% - 9.50% | 6.25% |
| Cost of debt | 7.00% - 8.70% | 7.85% |
| WACC | 5.8% - 9.1% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | -0.29 | 0.17 |
| Additional risk adjustments | 3.5% | 4.0% |
| Cost of equity | 5.30% | 9.60% |
| Tax rate | 3.00% | 9.50% |
| Debt/Equity ratio | 0.48 | 0.48 |
| Cost of debt | 7.00% | 8.70% |
| After-tax WACC | 5.8% | 9.1% |
| Selected WACC | 7.4% | |
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 (7.45%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (-0.29) + risk_adjustments (3.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.