The WACC of Paramount Communications Ltd (PARACABLES.NS) is 17.0%.
| Range | Selected | |
| Cost of equity | 15.50% - 19.10% | 17.30% |
| Tax rate | 30.00% - 30.00% | 30.00% |
| Cost of debt | 5.00% - 7.90% | 6.45% |
| WACC | 15.2% - 18.7% | 17.0% |
| Category | Low | High |
| Long-term bond rate | 6.9% | 7.4% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.04 | 1.2 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.50% | 19.10% |
| Tax rate | 30.00% | 30.00% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 5.00% | 7.90% |
| After-tax WACC | 15.2% | 18.7% |
| Selected WACC | 17.0% | |
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 PARACABLES.NS:
cost_of_equity (17.30%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (1.04) + 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.