HRME.JK WACC - Weighted Average Cost of Capital

The WACC of Menteng Heritage Realty Tbk PT (HRME.JK) is 8.8%.

The Cost of Equity of Menteng Heritage Realty Tbk PT (HRME.JK) is 15.50%.

The Cost of Debt of Menteng Heritage Realty Tbk PT (HRME.JK) is 5.60%.

	Range	Selected
Cost of equity	12.20% - 18.80%	15.50%
Tax rate	22.40% - 31.70%	27.05%
Cost of debt	4.00% - 7.20%	5.60%
WACC	6.9% - 10.8%	8.8%

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	0.71	1.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.20%	18.80%

Tax rate	22.40%	31.70%
Debt/Equity ratio	1.39	1.39
Cost of debt	4.00%	7.20%

After-tax WACC	6.9%	10.8%


Selected WACC	8.8%

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 (15.50%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.71) + 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.