The WACC of EKA Noodles Bhd (EKA.KL) is 5.6%.
| Range | Selected | |
| Cost of equity | 10.20% - 12.80% | 11.50% |
| Tax rate | 3.00% - 4.00% | 3.50% |
| Cost of debt | 4.00% - 4.90% | 4.45% |
| WACC | 5.0% - 6.2% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 1.01 | 1.09 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 12.80% |
| Tax rate | 3.00% | 4.00% |
| Debt/Equity ratio | 4.54 | 4.54 |
| Cost of debt | 4.00% | 4.90% |
| After-tax WACC | 5.0% | 6.2% |
| Selected WACC | 5.6% | |
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 EKA.KL:
cost_of_equity (11.50%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (1.01) + 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.