The WACC of Capital Partners SA (CPA.WA) is 8.2%.
| Range | Selected | |
| Cost of equity | 10.50% - 13.80% | 12.15% |
| Tax rate | 14.80% - 16.10% | 15.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.4% - 9.0% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.78 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.50% | 13.80% |
| Tax rate | 14.80% | 16.10% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.4% | 9.0% |
| Selected WACC | 8.2% | |
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 CPA.WA:
cost_of_equity (12.15%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.78) + 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.