The WACC of Utilico Emerging Markets Trust PLC (UEM.L) is 9.5%.
Range | Selected | |
Cost of equity | 8.7% - 10.7% | 9.7% |
Tax rate | 4.7% - 10.6% | 7.65% |
Cost of debt | 7.0% - 7.0% | 7% |
WACC | 8.6% - 10.5% | 9.5% |
Category | Low | High |
Long-term bond rate | 4.0% | 4.5% |
Equity market risk premium | 6.0% | 7.0% |
Adjusted beta | 0.78 | 0.81 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 8.7% | 10.7% |
Tax rate | 4.7% | 10.6% |
Debt/Equity ratio | 0.04 | 0.04 |
Cost of debt | 7.0% | 7.0% |
After-tax WACC | 8.6% | 10.5% |
Selected WACC | 9.5% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
UEM.L | Utilico Emerging Markets Trust PLC | 0.04 | 0.91 | 0.87 |
AAS.L | Aberdeen Standard Asia Focus PLC | 0.16 | 0.89 | 0.77 |
ANII.L | Aberdeen New India Investment Trust PLC | 0.07 | 0.67 | 0.63 |
BCI.L | BMO Capital and Income Investment Trust PLC | 0.08 | 1.3 | 1.22 |
LWI.L | Lowland Investment Company P L C | 0.15 | 1.52 | 1.33 |
SCIN.L | Scottish Investment Trust PLC | 0.14 | 0.83 | 0.74 |
SJG.L | Schroder Japan Growth Fund PLC | 0.16 | 0.74 | 0.64 |
SST.L | Scottish Oriental Smaller Companies Trust PLC | 0.09 | 0.67 | 0.62 |
TFIF.L | TwentyFour Income Fund Ltd | 0.02 | 0.48 | 0.47 |
TIGT.L | Troy Income & Growth Trust PLC | 0.02 | 0.68 | 0.67 |
UTL.L | UIL Ltd | 0.93 | 1.12 | 0.59 |
Low | High | |
Unlevered beta | 0.64 | 0.74 |
Relevered beta | 0.67 | 0.72 |
Adjusted relevered beta | 0.78 | 0.81 |
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 UEM.L:
cost_of_equity (9.70%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.78) + 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.