PRESTAR.KL WACC - Weighted Average Cost of Capital

The WACC of Prestar Resources Bhd (PRESTAR.KL) is 7.0%.

The Cost of Equity of Prestar Resources Bhd (PRESTAR.KL) is 8.35%.

The Cost of Debt of Prestar Resources Bhd (PRESTAR.KL) is 5.50%.

	Range	Selected
Cost of equity	7.10% - 9.60%	8.35%
Tax rate	17.60% - 19.80%	18.70%
Cost of debt	4.10% - 6.90%	5.50%
WACC	5.8% - 8.2%	7.0%

WACC

PRESTAR.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.48	0.61

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.10%	9.60%

Tax rate	17.60%	19.80%
Debt/Equity ratio	0.53	0.53
Cost of debt	4.10%	6.90%

After-tax WACC	5.8%	8.2%


Selected WACC	7.0%

PRESTAR.KL'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 PRESTAR.KL:

cost_of_equity (8.35%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.48) + 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.