The WACC of Masraf Al Rayan QPSC (MARK.QA) is 7.5%.
| Range | Selected | |
| Cost of equity | 10.00% - 15.80% | 12.90% |
| Tax rate | 1.80% - 2.00% | 1.90% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 6.5% - 8.4% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 5.0% | 5.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.84 | 1.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 15.80% |
| Tax rate | 1.80% | 2.00% |
| Debt/Equity ratio | 2.14 | 2.14 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 6.5% | 8.4% |
| Selected WACC | 7.5% | |
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 (12.90%) = risk_free_rate (5.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.84) + 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.