U11.SI
United Overseas Bank Ltd
Price:  
37.10 
SGD
Volume:  
2,128,100.00
Singapore | Banks
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U11.SI WACC - Weighted Average Cost of Capital

The WACC of United Overseas Bank Ltd (U11.SI) is 7.5%.

The Cost of Equity of United Overseas Bank Ltd (U11.SI) is 9.85%.
The Cost of Debt of United Overseas Bank Ltd (U11.SI) is 5.00%.

Range Selected
Cost of equity 8.40% - 11.30% 9.85%
Tax rate 16.90% - 17.20% 17.05%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.7% - 8.4% 7.5%
WACC

U11.SI WACC calculation

Category Low High
Long-term bond rate 2.7% 3.2%
Equity market risk premium 5.1% 6.1%
Adjusted beta 1.11 1.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 11.30%
Tax rate 16.90% 17.20%
Debt/Equity ratio 0.69 0.69
Cost of debt 5.00% 5.00%
After-tax WACC 6.7% 8.4%
Selected WACC 7.5%

U11.SI'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 U11.SI:

cost_of_equity (9.85%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (1.11) + 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.