The WACC of Grand Hoover Bhd (HOOVER.KL) is 9.5%.
| Range | Selected | |
| Cost of equity | 8.90% - 10.90% | 9.90% |
| Tax rate | 38.40% - 44.50% | 41.45% |
| Cost of debt | 5.40% - 14.20% | 9.80% |
| WACC | 8.3% - 10.6% | 9.5% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 0.79 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.90% | 10.90% |
| Tax rate | 38.40% | 44.50% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 5.40% | 14.20% |
| After-tax WACC | 8.3% | 10.6% |
| Selected WACC | 9.5% | |
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 HOOVER.KL:
cost_of_equity (9.90%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (0.79) + 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.