PAC.L WACC - Weighted Average Cost of Capital
The WACC of Pacific Assets Trust PLC (PAC.L) is 8.8%.
| Range | Selected | |
| Cost of equity | 11.1% - 14.6% | 12.85% |
| Tax rate | 4.9% - 8.6% | 6.75% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.9% - 9.6% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 1.52 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.1% | 14.6% |
| Tax rate | 4.9% | 8.6% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.9% | 9.6% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| PAC.L | Pacific Assets Trust PLC | 0.98 | 0.59 | 0.3 |
| AEMC.L | Aberdeen Emerging Markets Investment Company Ltd | 0.04 | 0.78 | 0.75 |
| BUT.L | Brunner Investment Trust PLC | 0.06 | 0.91 | 0.86 |
| GABI.L | GCP Asset Backed Income Fund Ltd | 0.99 | 0.92 | 0.47 |
| HEFT.L | Henderson European Focus Trust PLC | 0.05 | 1.09 | 1.04 |
| JMI.L | JPmorgan Smaller Companies Investment Trust PLC | 0.12 | 1.68 | 1.51 |
| JPEI.L | Jpmorgan Elect PLC | 0.02 | 1.15 | 1.13 |
| JUSC.L | JPmorgan US Smaller Companies Investment Trust PLC | 0.11 | 1.56 | 1.42 |
| MTE.L | Montanaro European Smaller Companies Trust PLC | 0.03 | 1.22 | 1.19 |
| NAIT.L | North American Income Trust PLC | 0.1 | 1.13 | 1.03 |
| SWEF.L | Starwood European Real Estate Finance Ltd | 1.19 | 0.59 | 0.28 |
| Low | High | |
| Unlevered beta | 0.86 | 1.04 |
| Relevered beta | 1.78 | 2.01 |
| Adjusted relevered beta | 1.52 | 1.68 |
PAC.L'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 PAC.L:
cost_of_equity (12.85%) = risk_free_rate (3.15%) + equity_risk_premium (5.80%) * adjusted_beta (1.52) + 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.