SMAR.JK WACC - Weighted Average Cost of Capital

The WACC of Sinar Mas Agro Resources and Technology Tbk PT (SMAR.JK) is 7.3%.

The Cost of Equity of Sinar Mas Agro Resources and Technology Tbk PT (SMAR.JK) is 12.70%.

The Cost of Debt of Sinar Mas Agro Resources and Technology Tbk PT (SMAR.JK) is 5.50%.

	Range	Selected
Cost of equity	11.30% - 14.10%	12.70%
Tax rate	19.30% - 20.10%	19.70%
Cost of debt	4.00% - 7.00%	5.50%
WACC	6.1% - 8.6%	7.3%

WACC

SMAR.JK WACC calculation

Category	Low	High

Long-term bond rate	6.6%	7.1%
Equity market risk premium	7.9%	8.9%
Adjusted beta	0.6	0.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.30%	14.10%

Tax rate	19.30%	20.10%
Debt/Equity ratio	1.86	1.86
Cost of debt	4.00%	7.00%

After-tax WACC	6.1%	8.6%


Selected WACC	7.3%

SMAR.JK'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 SMAR.JK:

cost_of_equity (12.70%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.6) + 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.