RICHY.BK WACC - Weighted Average Cost of Capital

The WACC of Richy Place 2002 PCL (RICHY.BK) is 11.4%.

The Cost of Equity of Richy Place 2002 PCL (RICHY.BK) is 16.25%.

The Cost of Debt of Richy Place 2002 PCL (RICHY.BK) is 13.10%.

	Range	Selected
Cost of equity	11.60% - 20.90%	16.25%
Tax rate	16.10% - 21.50%	18.80%
Cost of debt	6.60% - 19.60%	13.10%
WACC	6.5% - 16.2%	11.4%

WACC

RICHY.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	1.22	2.06

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.60%	20.90%

Tax rate	16.10%	21.50%
Debt/Equity ratio	5.33	5.33
Cost of debt	6.60%	19.60%

After-tax WACC	6.5%	16.2%


Selected WACC	11.4%

RICHY.BK'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 RICHY.BK:

cost_of_equity (16.25%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (1.22) + 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.