The WACC of Ocean Commerce PCL (OCEAN.BK) is 6.6%.
| Range | Selected | |
| Cost of equity | 5.40% - 7.80% | 6.60% |
| Tax rate | 14.00% - 17.10% | 15.55% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.4% - 7.8% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 0.32 | 0.47 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.40% | 7.80% |
| Tax rate | 14.00% | 17.10% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.4% | 7.8% |
| Selected WACC | 6.6% | |
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 OCEAN.BK:
cost_of_equity (6.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.80%) * adjusted_beta (0.32) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.