The WACC of LDC Dental PCL (LDC.BK) is 8.4%.
| Range | Selected | |
| Cost of equity | 5.90% - 10.20% | 8.05% |
| Tax rate | 16.30% - 19.50% | 17.90% |
| Cost of debt | 6.90% - 14.30% | 10.60% |
| WACC | 5.8% - 10.9% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.45 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.90% | 10.20% |
| Tax rate | 16.30% | 19.50% |
| Debt/Equity ratio | 1.21 | 1.21 |
| Cost of debt | 6.90% | 14.30% |
| After-tax WACC | 5.8% | 10.9% |
| Selected WACC | 8.4% | |
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 LDC.BK:
cost_of_equity (8.05%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.45) + 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.