The WACC of Equity Development Investment Tbk PT (GSMF.JK) is 11.6%.
| Range | Selected | |
| Cost of equity | 11.10% - 13.20% | 12.15% |
| Tax rate | 20.10% - 27.30% | 23.70% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 10.6% - 12.5% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.57 | 0.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.10% | 13.20% |
| Tax rate | 20.10% | 27.30% |
| Debt/Equity ratio | 0.08 | 0.08 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 10.6% | 12.5% |
| Selected WACC | 11.6% | |
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 GSMF.JK:
cost_of_equity (12.15%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.57) + 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.