The WACC of Eastern Star Real Estate PCL (ESTAR.BK) is 8.1%.
| Range | Selected | |
| Cost of equity | 5.70% - 9.70% | 7.70% |
| Tax rate | 30.20% - 32.60% | 31.40% |
| Cost of debt | 5.30% - 19.60% | 12.45% |
| WACC | 4.5% - 11.8% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.42 | 0.72 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 9.70% |
| Tax rate | 30.20% | 32.60% |
| Debt/Equity ratio | 1.5 | 1.5 |
| Cost of debt | 5.30% | 19.60% |
| After-tax WACC | 4.5% | 11.8% |
| Selected WACC | 8.1% | |
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 ESTAR.BK:
cost_of_equity (7.70%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.42) + 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.