The WACC of IOI Properties Group Bhd (IOIPG.KL) is 7.5%.
| Range | Selected | |
| Cost of equity | 12.00% - 17.20% | 14.60% |
| Tax rate | 28.00% - 38.00% | 33.00% |
| Cost of debt | 4.00% - 6.90% | 5.45% |
| WACC | 6.1% - 8.9% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 1.2 | 1.59 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 17.20% |
| Tax rate | 28.00% | 38.00% |
| Debt/Equity ratio | 1.82 | 1.82 |
| Cost of debt | 4.00% | 6.90% |
| After-tax WACC | 6.1% | 8.9% |
| Selected WACC | 7.5% | |
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 IOIPG.KL:
cost_of_equity (14.60%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.2) + 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.