The WACC of General Engineering PCL (GEL.BK) is 8.8%.
| Range | Selected | |
| Cost of equity | 35.20% - 48.30% | 41.75% |
| Tax rate | 6.20% - 8.40% | 7.30% |
| Cost of debt | 5.10% - 7.00% | 6.05% |
| WACC | 7.5% - 10.1% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 4.39 | 5.3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 35.20% | 48.30% |
| Tax rate | 6.20% | 8.40% |
| Debt/Equity ratio | 10.42 | 10.42 |
| Cost of debt | 5.10% | 7.00% |
| After-tax WACC | 7.5% | 10.1% |
| Selected WACC | 8.8% | |
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 GEL.BK:
cost_of_equity (41.75%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (4.39) + 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.