EA.BK WACC - Weighted Average Cost of Capital

The WACC of Energy Absolute PCL (EA.BK) is 6.5%.

The Cost of Equity of Energy Absolute PCL (EA.BK) is 9.80%.

The Cost of Debt of Energy Absolute PCL (EA.BK) is 5.50%.

	Range	Selected
Cost of equity	7.90% - 11.70%	9.80%
Tax rate	1.30% - 2.40%	1.85%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.9% - 8.1%	6.5%

WACC

EA.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.71	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.90%	11.70%

Tax rate	1.30%	2.40%
Debt/Equity ratio	2.97	2.97
Cost of debt	4.00%	7.00%

After-tax WACC	4.9%	8.1%


Selected WACC	6.5%

EA.BK'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 EA.BK:

cost_of_equity (9.80%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.71) + 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.