The WACC of Modernland Realty Tbk PT (MDLN.JK) is 14.5%.
| Range | Selected | |
| Cost of equity | 16.50% - 27.70% | 22.10% |
| Tax rate | 2.30% - 11.50% | 6.90% |
| Cost of debt | 4.00% - 26.60% | 15.30% |
| WACC | 5.0% - 23.9% | 14.5% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 1.25 | 2.27 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.50% | 27.70% |
| Tax rate | 2.30% | 11.50% |
| Debt/Equity ratio | 10.27 | 10.27 |
| Cost of debt | 4.00% | 26.60% |
| After-tax WACC | 5.0% | 23.9% |
| Selected WACC | 14.5% | |
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 MDLN.JK:
cost_of_equity (22.10%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1.25) + 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.