The WACC of Refinaria de Petroleos de Manguinhos SA em Recuperacao Judicial (RPMG3.SA) is 16.4%.
| Range | Selected | |
| Cost of equity | 15.70% - 17.70% | 16.70% |
| Tax rate | 34.00% - 34.00% | 34.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 15.5% - 17.4% | 16.4% |
| Category | Low | High |
| Long-term bond rate | 11.9% | 12.4% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.4 | 0.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.70% | 17.70% |
| Tax rate | 34.00% | 34.00% |
| Debt/Equity ratio | 0.02 | 0.02 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 15.5% | 17.4% |
| Selected WACC | 16.4% | |
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 RPMG3.SA:
cost_of_equity (16.70%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (0.4) + 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.