The WACC of Salona Cotspin Ltd (SALONA.NS) is 11.2%.
Range | Selected | |
Cost of equity | 12.30% - 17.20% | 14.75% |
Tax rate | 23.70% - 26.40% | 25.05% |
Cost of debt | 8.50% - 15.40% | 11.95% |
WACC | 8.7% - 13.6% | 11.2% |
Category | Low | High |
Long-term bond rate | 6.9% | 7.4% |
Equity market risk premium | 8.3% | 9.3% |
Adjusted beta | 0.66 | 1 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 12.30% | 17.20% |
Tax rate | 23.70% | 26.40% |
Debt/Equity ratio | 1.61 | 1.61 |
Cost of debt | 8.50% | 15.40% |
After-tax WACC | 8.7% | 13.6% |
Selected WACC | 11.2% | |
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 SALONA.NS:
cost_of_equity (14.75%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.66) + 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.