PRM.BK WACC - Weighted Average Cost of Capital

The WACC of Prima Marine PCL (PRM.BK) is 7.4%.

The Cost of Equity of Prima Marine PCL (PRM.BK) is 9.70%.

The Cost of Debt of Prima Marine PCL (PRM.BK) is 4.25%.

	Range	Selected
Cost of equity	8.20% - 11.20%	9.70%
Tax rate	7.80% - 8.50%	8.15%
Cost of debt	4.00% - 4.50%	4.25%
WACC	6.4% - 8.4%	7.4%

WACC

PRM.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.76	0.91

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.20%	11.20%

Tax rate	7.80%	8.50%
Debt/Equity ratio	0.67	0.67
Cost of debt	4.00%	4.50%

After-tax WACC	6.4%	8.4%


Selected WACC	7.4%

PRM.BK'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 PRM.BK:

cost_of_equity (9.70%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.76) + 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.