The WACC of Future Enterprises Ltd (FEL.NS) is 9.8%.
| Range | Selected | |
| Cost of equity | 181.70% - 433.20% | 307.45% |
| Tax rate | 6.00% - 11.10% | 8.55% |
| Cost of debt | 7.00% - 10.80% | 8.90% |
| WACC | 7.6% - 12.0% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 21.04 | 45.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 181.70% | 433.20% |
| Tax rate | 6.00% | 11.10% |
| Debt/Equity ratio | 176.76 | 176.76 |
| Cost of debt | 7.00% | 10.80% |
| After-tax WACC | 7.6% | 12.0% |
| Selected WACC | 9.8% | |
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 FEL.NS:
cost_of_equity (307.45%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (21.04) + 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.