The WACC of Eastern Power Group PCL (EP.BK) is 13.3%.
| Range | Selected | |
| Cost of equity | 6.60% - 11.40% | 9.00% |
| Tax rate | 0.80% - 0.90% | 0.85% |
| Cost of debt | 6.00% - 22.60% | 14.30% |
| WACC | 6.1% - 20.5% | 13.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.55 | 0.93 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.60% | 11.40% |
| Tax rate | 0.80% | 0.90% |
| Debt/Equity ratio | 4.97 | 4.97 |
| Cost of debt | 6.00% | 22.60% |
| After-tax WACC | 6.1% | 20.5% |
| Selected WACC | 13.3% | |
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 EP.BK:
cost_of_equity (9.00%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.55) + 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.