The WACC of Jadestone Energy Inc (JSE.L) is 13.4%.
| Range | Selected | |
| Cost of equity | 10.00% - 13.30% | 11.65% |
| Tax rate | 8.80% - 40.90% | 24.85% |
| Cost of debt | 7.60% - 38.30% | 22.95% |
| WACC | 8.3% - 18.6% | 13.4% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.01 | 1.19 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 13.30% |
| Tax rate | 8.80% | 40.90% |
| Debt/Equity ratio | 1.33 | 1.33 |
| Cost of debt | 7.60% | 38.30% |
| After-tax WACC | 8.3% | 18.6% |
| Selected WACC | 13.4% | |
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 JSE.L:
cost_of_equity (11.65%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.01) + 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.