The WACC of WCT Holdings Bhd (WCT.KL) is 7.9%.
| Range | Selected | |
| Cost of equity | 17.30% - 22.80% | 20.05% |
| Tax rate | 21.50% - 24.00% | 22.75% |
| Cost of debt | 4.60% - 7.40% | 6.00% |
| WACC | 6.5% - 9.3% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 1.97 | 2.3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.30% | 22.80% |
| Tax rate | 21.50% | 24.00% |
| Debt/Equity ratio | 3.64 | 3.64 |
| Cost of debt | 4.60% | 7.40% |
| After-tax WACC | 6.5% | 9.3% |
| Selected WACC | 7.9% | |
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 WCT.KL:
cost_of_equity (20.05%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.97) + 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.