The WACC of Nova Msc Bhd (NOVAMSC.KL) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.30% - 9.20% | 8.25% |
| Tax rate | 0.10% - 0.20% | 0.15% |
| Cost of debt | 7.00% - 7.70% | 7.35% |
| WACC | 7.3% - 9.1% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.51 | 0.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.30% | 9.20% |
| Tax rate | 0.10% | 0.20% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 7.00% | 7.70% |
| After-tax WACC | 7.3% | 9.1% |
| Selected WACC | 8.2% | |
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 NOVAMSC.KL:
cost_of_equity (8.25%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.51) + 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.