The WACC of Gulf Warehousing Company QPSC (GWCS.QA) is 10.0%.
| Range | Selected | |
| Cost of equity | 11.00% - 17.60% | 14.30% |
| Tax rate | 0.90% - 1.00% | 0.95% |
| Cost of debt | 4.80% - 8.60% | 6.70% |
| WACC | 7.5% - 12.5% | 10.0% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.01 | 1.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.00% | 17.60% |
| Tax rate | 0.90% | 1.00% |
| Debt/Equity ratio | 1.29 | 1.29 |
| Cost of debt | 4.80% | 8.60% |
| After-tax WACC | 7.5% | 12.5% |
| Selected WACC | 10.0% | |
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 GWCS.QA:
cost_of_equity (14.30%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.01) + 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.