The WACC of Masraf Al Rayan QPSC (MARK.QA) is 7.7%.
| Range | Selected | |
| Cost of equity | 10.30% - 13.80% | 12.05% |
| Tax rate | 1.10% - 1.80% | 1.45% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 7.0% - 8.4% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.88 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.30% | 13.80% |
| Tax rate | 1.10% | 1.80% |
| Debt/Equity ratio | 1.53 | 1.53 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 7.0% | 8.4% |
| 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 MARK.QA:
cost_of_equity (12.05%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.88) + 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.