RALCO.KL WACC - Weighted Average Cost of Capital

The WACC of Ralco Corporation Bhd (RALCO.KL) is 11.7%.

The Cost of Equity of Ralco Corporation Bhd (RALCO.KL) is 12.25%.

The Cost of Debt of Ralco Corporation Bhd (RALCO.KL) is 11.10%.

	Range	Selected
Cost of equity	9.90% - 14.60%	12.25%
Tax rate	17.10% - 18.80%	17.95%
Cost of debt	7.00% - 15.20%	11.10%
WACC	9.1% - 14.2%	11.7%

WACC

RALCO.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.88	1.25

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.90%	14.60%

Tax rate	17.10%	18.80%
Debt/Equity ratio	0.21	0.21
Cost of debt	7.00%	15.20%

After-tax WACC	9.1%	14.2%


Selected WACC	11.7%

RALCO.KL'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 RALCO.KL:

cost_of_equity (12.25%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.88) + 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.