The WACC of Fragrance Group Ltd (F31.SI) is 7.0%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.30% | 6.20% |
| Tax rate | 9.70% - 12.90% | 11.30% |
| Cost of debt | 4.00% - 12.90% | 8.45% |
| WACC | 4.1% - 10.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.46 | 0.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.10% | 7.30% |
| Tax rate | 9.70% | 12.90% |
| Debt/Equity ratio | 2.1 | 2.1 |
| Cost of debt | 4.00% | 12.90% |
| After-tax WACC | 4.1% | 10.0% |
| Selected WACC | 7.0% | |
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 F31.SI:
cost_of_equity (6.20%) = risk_free_rate (3.15%) + equity_risk_premium (5.20%) * adjusted_beta (0.46) + 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.