The WACC of Sahakol Equipment PCL (SQ.BK) is 14.8%.
| Range | Selected | |
| Cost of equity | 31.20% - 46.20% | 38.70% |
| Tax rate | 3.30% - 11.10% | 7.20% |
| Cost of debt | 4.00% - 19.60% | 11.80% |
| WACC | 7.9% - 21.6% | 14.8% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 3.85 | 5.05 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 31.20% | 46.20% |
| Tax rate | 3.30% | 11.10% |
| Debt/Equity ratio | 5.78 | 5.78 |
| Cost of debt | 4.00% | 19.60% |
| After-tax WACC | 7.9% | 21.6% |
| Selected WACC | 14.8% | |
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 SQ.BK:
cost_of_equity (38.70%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (3.85) + 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.