The WACC of Wilmar International Ltd (F34.SI) is 5.1%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.00% | 6.05% |
| Tax rate | 22.20% - 25.90% | 24.05% |
| Cost of debt | 4.00% - 8.00% | 6.00% |
| WACC | 3.8% - 6.3% | 5.1% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.48 | 0.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.10% | 7.00% |
| Tax rate | 22.20% | 25.90% |
| Debt/Equity ratio | 1.89 | 1.89 |
| Cost of debt | 4.00% | 8.00% |
| After-tax WACC | 3.8% | 6.3% |
| Selected WACC | 5.1% | |
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 F34.SI:
cost_of_equity (6.05%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.48) + 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.