The WACC of Proud Real Estate PCL (PROUD.BK) is 11.8%.
| Range | Selected | |
| Cost of equity | 11.20% - 26.20% | 18.70% |
| Tax rate | 21.90% - 25.30% | 23.60% |
| Cost of debt | 6.00% - 22.60% | 14.30% |
| WACC | 5.6% - 18.1% | 11.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 1.16 | 2.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.20% | 26.20% |
| Tax rate | 21.90% | 25.30% |
| Debt/Equity ratio | 6.61 | 6.61 |
| Cost of debt | 6.00% | 22.60% |
| After-tax WACC | 5.6% | 18.1% |
| Selected WACC | 11.8% | |
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 PROUD.BK:
cost_of_equity (18.70%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (1.16) + 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.