The WACC of Kapuas Prima Coal Tbk PT (ZINC.JK) is 12.0%.
| Range | Selected | |
| Cost of equity | 14.00% - 18.50% | 16.25% |
| Tax rate | 13.30% - 21.60% | 17.45% |
| Cost of debt | 4.00% - 23.60% | 13.80% |
| WACC | 5.6% - 18.5% | 12.0% |
| Category | Low | High |
| Long-term bond rate | 6.6% | 7.1% |
| Equity market risk premium | 7.9% | 8.9% |
| Adjusted beta | 0.94 | 1.22 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 14.00% | 18.50% |
| Tax rate | 13.30% | 21.60% |
| Debt/Equity ratio | 4 | 4 |
| Cost of debt | 4.00% | 23.60% |
| After-tax WACC | 5.6% | 18.5% |
| Selected WACC | 12.0% | |
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 ZINC.JK:
cost_of_equity (16.25%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.94) + 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.