The WACC of Proud Real Estate PCL (PROUD.BK) is 4.7%.
| Range | Selected | |
| Cost of equity | 3.40% - 7.10% | 5.25% |
| Tax rate | 21.90% - 29.60% | 25.75% |
| Cost of debt | 6.10% - 6.20% | 6.15% |
| WACC | 4.4% - 5.0% | 4.7% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 0.05 | 0.36 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 3.40% | 7.10% |
| Tax rate | 21.90% | 29.60% |
| Debt/Equity ratio | 3.4 | 3.4 |
| Cost of debt | 6.10% | 6.20% |
| After-tax WACC | 4.4% | 5.0% |
| Selected WACC | 4.7% | |
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 (5.25%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.05) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.