SST.L WACC - Weighted Average Cost of Capital
The WACC of Scottish Oriental Smaller Companies Trust PLC (SST.L) is 10.9%.
| Range | Selected | |
| Cost of equity | 10.0% - 13.1% | 11.55% |
| Tax rate | 8.8% - 11.3% | 10.05% |
| Cost of debt | 4.6% - 4.6% | 4.6% |
| WACC | 9.5% - 12.4% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.0% | 13.1% |
| Tax rate | 8.8% | 11.3% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.6% | 4.6% |
| After-tax WACC | 9.5% | 12.4% |
| Selected WACC | 10.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SST.L | Scottish Oriental Smaller Companies Trust PLC | 0.09 | 0.67 | 0.62 |
| BCI.L | BMO Capital and Income Investment Trust PLC | 0.08 | 1.3 | 1.22 |
| BGUK.L | Baillie Gifford UK Growth Fund PLC | 0.96 | 1.27 | 0.68 |
| JCH.L | JPmorgan Claverhouse Investment Trust PLC | 0.09 | 1.19 | 1.1 |
| MTE.L | Montanaro European Smaller Companies Trust PLC | 0.07 | 1.22 | 1.15 |
| SCF.L | Schroder Income Growth Fund PLC | 0.13 | 1.24 | 1.12 |
| SCP.L | Schroder UK Mid Cap Fund PLC | 0.12 | 1.73 | 1.56 |
| SJG.L | Schroder Japan Growth Fund PLC | 0.16 | 0.74 | 0.64 |
| TIGT.L | Troy Income & Growth Trust PLC | 0.02 | 0.68 | 0.67 |
| UTL.L | UIL Ltd | 0.93 | 1.12 | 0.6 |
| Low | High | |
| Unlevered beta | 0.67 | 1.1 |
| Relevered beta | 1 | 1.24 |
| Adjusted relevered beta | 1 | 1.16 |
SST.L'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 SST.L:
cost_of_equity (11.55%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1) + 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.