The WACC of Drake and Scull International PJSC (DSI.DB) is 8.0%.
| Range | Selected | |
| Cost of equity | 9.10% - 11.80% | 10.45% |
| Tax rate | 0.60% - 0.90% | 0.75% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 7.6% - 8.4% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.55 | 0.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.10% | 11.80% |
| Tax rate | 0.60% | 0.90% |
| Debt/Equity ratio | 2.26 | 2.26 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 7.6% | 8.4% |
| 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 DSI.DB:
cost_of_equity (10.45%) = risk_free_rate (6.15%) + equity_risk_premium (6.30%) * adjusted_beta (0.55) + 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.