Q5T.SI WACC - Weighted Average Cost of Capital

The WACC of Far East Hospitality Trust (Q5T.SI) is 6.3%.

The Cost of Equity of Far East Hospitality Trust (Q5T.SI) is 7.20%.

The Cost of Debt of Far East Hospitality Trust (Q5T.SI) is 4.95%.

	Range	Selected
Cost of equity	5.70% - 8.70%	7.20%
Tax rate	0.10% - 0.10%	0.10%
Cost of debt	4.00% - 5.90%	4.95%
WACC	5.0% - 7.6%	6.3%

WACC

Q5T.SI WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.58	0.81

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.70%	8.70%

Tax rate	0.10%	0.10%
Debt/Equity ratio	0.63	0.63
Cost of debt	4.00%	5.90%

After-tax WACC	5.0%	7.6%


Selected WACC	6.3%

Q5T.SI'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 Q5T.SI:

cost_of_equity (7.20%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.58) + 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.