The WACC of General Environmental Conservation PCL (GENCO.BK) is 6.7%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.00% | 6.85% |
| Tax rate | 2.30% - 3.10% | 2.70% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 5.5% - 7.9% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.42 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.00% |
| Tax rate | 2.30% | 3.10% |
| Debt/Equity ratio | 0.14 | 0.14 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 5.5% | 7.9% |
| Selected WACC | 6.7% | |
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 GENCO.BK:
cost_of_equity (6.85%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.42) + 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.