The WACC of Gulf Warehousing Company QPSC (GWCS.QA) is 10.7%.
| Range | Selected | |
| Cost of equity | 14.60% - 18.80% | 16.70% |
| Tax rate | 1.00% - 1.00% | 1.00% |
| Cost of debt | 5.10% - 8.60% | 6.85% |
| WACC | 8.8% - 12.6% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.59 | 1.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.60% | 18.80% |
| Tax rate | 1.00% | 1.00% |
| Debt/Equity ratio | 1.5 | 1.5 |
| Cost of debt | 5.10% | 8.60% |
| After-tax WACC | 8.8% | 12.6% |
| Selected WACC | 10.7% | |
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 GWCS.QA:
cost_of_equity (16.70%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.59) + 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.