The WACC of Leader Environmental Technologies Ltd (LS9.SI) is 8.3%.
| Range | Selected | |
| Cost of equity | 10.20% - 15.10% | 12.65% |
| Tax rate | 3.40% - 6.90% | 5.15% |
| Cost of debt | 4.30% - 7.00% | 5.65% |
| WACC | 6.6% - 10.0% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.47 | 1.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 15.10% |
| Tax rate | 3.40% | 6.90% |
| Debt/Equity ratio | 1.45 | 1.45 |
| Cost of debt | 4.30% | 7.00% |
| After-tax WACC | 6.6% | 10.0% |
| Selected WACC | 8.3% | |
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 LS9.SI:
cost_of_equity (12.65%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (1.47) + 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.