The WACC of Widetech (Malaysia) Bhd (WIDETEC.KL) is 8.0%.
| Range | Selected | |
| Cost of equity | 6.90% - 9.20% | 8.05% |
| Tax rate | 9.20% - 13.70% | 11.45% |
| Cost of debt | 4.90% - 7.00% | 5.95% |
| WACC | 6.9% - 9.1% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.9% | 6.9% |
| Adjusted beta | 0.46 | 0.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 9.20% |
| Tax rate | 9.20% | 13.70% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.90% | 7.00% |
| After-tax WACC | 6.9% | 9.1% |
| Selected WACC | 8.0% | |
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 WIDETEC.KL:
cost_of_equity (8.05%) = risk_free_rate (4.45%) + equity_risk_premium (6.40%) * adjusted_beta (0.46) + 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.