The WACC of Safari World PCL (SAFARI.BK) is 12.5%.
Range | Selected | |
Cost of equity | 10.20% - 14.00% | 12.10% |
Tax rate | 1.50% - 2.40% | 1.95% |
Cost of debt | 6.20% - 19.60% | 12.90% |
WACC | 6.7% - 18.4% | 12.5% |
Category | Low | High |
Long-term bond rate | 2.6% | 3.1% |
Equity market risk premium | 7.4% | 8.4% |
Adjusted beta | 1.03 | 1.24 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.20% | 14.00% |
Tax rate | 1.50% | 2.40% |
Debt/Equity ratio | 6 | 6 |
Cost of debt | 6.20% | 19.60% |
After-tax WACC | 6.7% | 18.4% |
Selected WACC | 12.5% | |
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 SAFARI.BK:
cost_of_equity (12.10%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (1.03) + 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.