The WACC of Stamford Tyres Corporation Ltd (S29.SI) is 4.6%.
| Range | Selected | |
| Cost of equity | 6.90% - 10.40% | 8.65% |
| Tax rate | 41.50% - 45.00% | 43.25% |
| Cost of debt | 4.20% - 6.30% | 5.25% |
| WACC | 3.8% - 5.5% | 4.6% |
| Category | Low | High |
| Long-term bond rate | 3.5% | 4.0% |
| Equity market risk premium | 4.7% | 5.7% |
| Adjusted beta | 0.71 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 10.40% |
| Tax rate | 41.50% | 45.00% |
| Debt/Equity ratio | 2.36 | 2.36 |
| Cost of debt | 4.20% | 6.30% |
| After-tax WACC | 3.8% | 5.5% |
| Selected WACC | 4.6% | |
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 S29.SI:
cost_of_equity (8.65%) = risk_free_rate (3.75%) + equity_risk_premium (5.20%) * adjusted_beta (0.71) + 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.