The WACC of Laguna Resorts and Hotels PCL (LRH.BK) is 7.7%.
| Range | Selected | |
| Cost of equity | 8.40% - 13.10% | 10.75% |
| Tax rate | 15.80% - 25.90% | 20.85% |
| Cost of debt | 4.00% - 5.70% | 4.85% |
| WACC | 6.2% - 9.2% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.78 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.40% | 13.10% |
| Tax rate | 15.80% | 25.90% |
| Debt/Equity ratio | 0.8 | 0.8 |
| Cost of debt | 4.00% | 5.70% |
| After-tax WACC | 6.2% | 9.2% |
| Selected WACC | 7.7% | |
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 LRH.BK:
cost_of_equity (10.75%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.78) + 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.