HRME.JK WACC - Weighted Average Cost of Capital

The WACC of Menteng Heritage Realty Tbk PT (HRME.JK) is 11.3%.

The Cost of Equity of Menteng Heritage Realty Tbk PT (HRME.JK) is 12.50%.

The Cost of Debt of Menteng Heritage Realty Tbk PT (HRME.JK) is 13.80%.

	Range	Selected
Cost of equity	11.30% - 13.70%	12.50%
Tax rate	21.60% - 31.20%	26.40%
Cost of debt	4.00% - 23.60%	13.80%
WACC	7.9% - 14.8%	11.3%

WACC

HRME.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.6	0.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	13.70%

Tax rate	21.60%	31.20%
Debt/Equity ratio	0.73	0.73
Cost of debt	4.00%	23.60%

After-tax WACC	7.9%	14.8%


Selected WACC	11.3%

HRME.JK's CAPM model and how its cost of Equity is calculated

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 HRME.JK:

cost_of_equity (12.50%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.6) + 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.