The WACC of Langgeng Makmur Industri Tbk PT (LMPI.JK) is 15.2%.
| Range | Selected | |
| Cost of equity | 18.60% - 31.20% | 24.90% |
| Tax rate | 3.90% - 9.10% | 6.50% |
| Cost of debt | 4.00% - 18.40% | 11.20% |
| WACC | 8.8% - 21.6% | 15.2% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 1.52 | 2.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.60% | 31.20% |
| Tax rate | 3.90% | 9.10% |
| Debt/Equity ratio | 1.99 | 1.99 |
| Cost of debt | 4.00% | 18.40% |
| After-tax WACC | 8.8% | 21.6% |
| Selected WACC | 15.2% | |
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 LMPI.JK:
cost_of_equity (24.90%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1.52) + 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.