The WACC of Emirates NBD Bank PJSC (EMIRATESNBD.DB) is 9.2%.
| Range | Selected | |
| Cost of equity | 10.20% - 13.90% | 12.05% |
| Tax rate | 7.90% - 9.80% | 8.85% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.1% - 10.3% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.74 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 13.90% |
| Tax rate | 7.90% | 9.80% |
| Debt/Equity ratio | 0.6 | 0.6 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.1% | 10.3% |
| Selected WACC | 9.2% | |
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 EMIRATESNBD.DB:
cost_of_equity (12.05%) = risk_free_rate (6.15%) + equity_risk_premium (6.30%) * adjusted_beta (0.74) + 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.