The WACC of EMCO Ltd (EMCO.NS) is 5.9%.
| Range | Selected | |
| Cost of equity | 165.10% - 301.60% | 233.35% |
| Tax rate | 30.40% - 31.90% | 31.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.2% - 6.6% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 6.9% | 7.9% |
| Adjusted beta | 22.86 | 37.08 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 165.10% | 301.60% |
| Tax rate | 30.40% | 31.90% |
| Debt/Equity ratio | 92.51 | 92.51 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.2% | 6.6% |
| Selected WACC | 5.9% | |
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 EMCO.NS:
cost_of_equity (233.35%) = risk_free_rate (7.15%) + equity_risk_premium (7.40%) * adjusted_beta (22.86) + 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.