LMPI.JK WACC - Weighted Average Cost of Capital

The WACC of Langgeng Makmur Industri Tbk PT (LMPI.JK) is 15.1%.

The Cost of Equity of Langgeng Makmur Industri Tbk PT (LMPI.JK) is 23.80%.

The Cost of Debt of Langgeng Makmur Industri Tbk PT (LMPI.JK) is 11.20%.

	Range	Selected
Cost of equity	17.30% - 30.30%	23.80%
Tax rate	3.90% - 9.10%	6.50%
Cost of debt	4.00% - 18.40%	11.20%
WACC	8.6% - 21.5%	15.1%

WACC

LMPI.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	1.36	2.55

Additional risk adjustments	0.0%	0.5%
Cost of equity	17.30%	30.30%

Tax rate	3.90%	9.10%
Debt/Equity ratio	1.83	1.83
Cost of debt	4.00%	18.40%

After-tax WACC	8.6%	21.5%


Selected WACC	15.1%

LMPI.JK's CAPM model and how its cost of Equity is calculated

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 (23.80%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1.36) + 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.