MERK.JK WACC - Weighted Average Cost of Capital

The WACC of Merck Tbk PT (MERK.JK) is 12.6%.

The Cost of Equity of Merck Tbk PT (MERK.JK) is 12.65%.

The Cost of Debt of Merck Tbk PT (MERK.JK) is 5.50%.

	Range	Selected
Cost of equity	11.40% - 13.90%	12.65%
Tax rate	23.20% - 27.00%	25.10%
Cost of debt	4.00% - 7.00%	5.50%
WACC	11.3% - 13.8%	12.6%

WACC

MERK.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.61	0.7

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	13.90%

Tax rate	23.20%	27.00%
Debt/Equity ratio	0.01	0.01
Cost of debt	4.00%	7.00%

After-tax WACC	11.3%	13.8%


Selected WACC	12.6%

MERK.JK's CAPM model and how its cost of Equity is calculated

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 MERK.JK:

cost_of_equity (12.65%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.61) + 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.