The WACC of Alliance Healthcare Group Ltd (MIJ.SI) is 9.3%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.00% | 6.15% |
| Tax rate | 13.30% - 13.80% | 13.55% |
| Cost of debt | 7.00% - 21.30% | 14.15% |
| WACC | 5.7% - 12.9% | 9.3% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.3 | 0.38 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.30% | 7.00% |
| Tax rate | 13.30% | 13.80% |
| Debt/Equity ratio | 1.08 | 1.08 |
| Cost of debt | 7.00% | 21.30% |
| After-tax WACC | 5.7% | 12.9% |
| Selected WACC | 9.3% | |
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 MIJ.SI:
cost_of_equity (6.15%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.3) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.