The WACC of Drozapol Profil SA (DPL.WA) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.30% - 9.30% | 8.30% |
| Tax rate | 10.60% - 16.70% | 13.65% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 7.2% - 8.9% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 5.5% | 6.0% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.28 | 0.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.30% | 9.30% |
| Tax rate | 10.60% | 16.70% |
| Debt/Equity ratio | 0.14 | 0.14 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 7.2% | 8.9% |
| Selected WACC | 8.0% | |
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 DPL.WA:
cost_of_equity (8.30%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.28) + 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.