The WACC of Pembangunan Perumahan (Persero) Tbk PT (PTPP.JK) is 7.3%.
| Range | Selected | |
| Cost of equity | 19.90% - 33.90% | 26.90% |
| Tax rate | 5.80% - 10.10% | 7.95% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 5.5% - 9.2% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 1.68 | 2.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 19.90% | 33.90% |
| Tax rate | 5.80% | 10.10% |
| Debt/Equity ratio | 8.43 | 8.43 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 5.5% | 9.2% |
| Selected WACC | 7.3% | |
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 PTPP.JK:
cost_of_equity (26.90%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (1.68) + 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.