The WACC of Krakchemia SA (KCH.WA) is 7.4%.
Range | Selected | |
Cost of equity | 7.70% - 9.40% | 8.55% |
Tax rate | 15.60% - 20.40% | 18.00% |
Cost of debt | 6.70% - 7.00% | 6.85% |
WACC | 6.9% - 8.0% | 7.4% |
Category | Low | High |
Long-term bond rate | 5.5% | 6.0% |
Equity market risk premium | 6.3% | 7.3% |
Adjusted beta | 0.34 | 0.4 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 7.70% | 9.40% |
Tax rate | 15.60% | 20.40% |
Debt/Equity ratio | 0.6 | 0.6 |
Cost of debt | 6.70% | 7.00% |
After-tax WACC | 6.9% | 8.0% |
Selected WACC | 7.4% | |
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 KCH.WA:
cost_of_equity (8.55%) = risk_free_rate (5.75%) + equity_risk_premium (6.80%) * adjusted_beta (0.34) + 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.