The WACC of Yinson Holdings Bhd (YINSON.KL) is 8.5%.
| Range | Selected | |
| Cost of equity | 13.70% - 17.00% | 15.35% |
| Tax rate | 28.10% - 29.90% | 29.00% |
| Cost of debt | 8.10% - 9.00% | 8.55% |
| WACC | 7.9% - 9.1% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 1.45 | 1.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.70% | 17.00% |
| Tax rate | 28.10% | 29.90% |
| Debt/Equity ratio | 2.8 | 2.8 |
| Cost of debt | 8.10% | 9.00% |
| After-tax WACC | 7.9% | 9.1% |
| Selected WACC | 8.5% | |
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 YINSON.KL:
cost_of_equity (15.35%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.45) + 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.