The WACC of Erech Finance Cahalacha Ltd (EFNC.TA) is 6.3%.
| Range | Selected | |
| Cost of equity | 12.40% - 17.60% | 15.00% |
| Tax rate | 21.80% - 35.20% | 28.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.9% - 6.7% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 4.8% | 5.3% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1.23 | 1.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.40% | 17.60% |
| Tax rate | 21.80% | 35.20% |
| Debt/Equity ratio | 3.18 | 3.18 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.9% | 6.7% |
| Selected WACC | 6.3% | |
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 EFNC.TA:
cost_of_equity (15.00%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (1.23) + 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.