DRBHCOM.KL
DRB-Hicom Bhd
Price:  
0.81 
MYR
Volume:  
1,391,600.00
Malaysia | Automobiles
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DRBHCOM.KL WACC - Weighted Average Cost of Capital

The WACC of DRB-Hicom Bhd (DRBHCOM.KL) is 12.7%.

The Cost of Equity of DRB-Hicom Bhd (DRBHCOM.KL) is 14.15%.
The Cost of Debt of DRB-Hicom Bhd (DRBHCOM.KL) is 15.60%.

Range Selected
Cost of equity 11.40% - 16.90% 14.15%
Tax rate 16.60% - 23.50% 20.05%
Cost of debt 15.60% - 15.60% 15.60%
WACC 12.8% - 12.5% 12.7%
WACC

DRBHCOM.KL WACC calculation

Category Low High
Long-term bond rate 3.8% 4.3%
Equity market risk premium 6.9% 7.8%
Adjusted beta 1.12 1.55
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.40% 16.90%
Tax rate 16.60% 23.50%
Debt/Equity ratio 7.06 7.06
Cost of debt 15.60% 15.60%
After-tax WACC 12.8% 12.5%
Selected WACC 12.7%

DRBHCOM.KL's CAPM model and how its cost of Equity is calculated

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 DRBHCOM.KL:

cost_of_equity (14.15%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.12) + 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.