FAREAST.KL WACC - Weighted Average Cost of Capital

The WACC of Far East Holdings Bhd (FAREAST.KL) is 9.3%.

The Cost of Equity of Far East Holdings Bhd (FAREAST.KL) is 9.65%.

The Cost of Debt of Far East Holdings Bhd (FAREAST.KL) is 4.25%.

	Range	Selected
Cost of equity	8.40% - 10.90%	9.65%
Tax rate	17.00% - 17.60%	17.30%
Cost of debt	4.00% - 4.50%	4.25%
WACC	8.1% - 10.5%	9.3%

WACC

FAREAST.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.67	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.40%	10.90%

Tax rate	17.00%	17.60%
Debt/Equity ratio	0.05	0.05
Cost of debt	4.00%	4.50%

After-tax WACC	8.1%	10.5%


Selected WACC	9.3%

FAREAST.KL's CAPM model and how its cost of Equity is calculated

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 FAREAST.KL:

cost_of_equity (9.65%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.67) + 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.