The WACC of Commercial Bank PSQC (CBQK.QA) is 7.1%.
| Range | Selected | |
| Cost of equity | 11.00% - 18.40% | 14.70% |
| Tax rate | 1.80% - 3.10% | 2.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.3% - 8.0% | 7.1% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1 | 1.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.00% | 18.40% |
| Tax rate | 1.80% | 3.10% |
| Debt/Equity ratio | 3.36 | 3.36 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.3% | 8.0% |
| Selected WACC | 7.1% | |
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 CBQK.QA:
cost_of_equity (14.70%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (1) + 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.