VL.BK WACC - Weighted Average Cost of Capital

The WACC of V L Enterprise PCL (VL.BK) is 7.1%.

The Cost of Equity of V L Enterprise PCL (VL.BK) is 8.70%.

The Cost of Debt of V L Enterprise PCL (VL.BK) is 5.90%.

	Range	Selected
Cost of equity	7.40% - 10.00%	8.70%
Tax rate	12.00% - 13.40%	12.70%
Cost of debt	4.00% - 7.80%	5.90%
WACC	5.7% - 8.6%	7.1%

WACC

VL.BK WACC calculation

Category	Low	High

Long-term bond rate	2.6%	3.1%
Equity market risk premium	7.4%	8.4%
Adjusted beta	0.65	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	10.00%

Tax rate	12.00%	13.40%
Debt/Equity ratio	0.81	0.81
Cost of debt	4.00%	7.80%

After-tax WACC	5.7%	8.6%


Selected WACC	7.1%

VL.BK'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 VL.BK:

cost_of_equity (8.70%) = risk_free_rate (2.85%) + equity_risk_premium (7.90%) * adjusted_beta (0.65) + 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.