AFHL.TA WACC - Weighted Average Cost of Capital

The WACC of Afcon Holdings Ltd (AFHL.TA) is 8.1%.

The Cost of Equity of Afcon Holdings Ltd (AFHL.TA) is 9.35%.

The Cost of Debt of Afcon Holdings Ltd (AFHL.TA) is 5.30%.

	Range	Selected
Cost of equity	8.10% - 10.60%	9.35%
Tax rate	22.80% - 23.80%	23.30%
Cost of debt	4.00% - 6.60%	5.30%
WACC	6.9% - 9.3%	8.1%

WACC

AFHL.TA WACC calculation

Category	Low	High

Long-term bond rate	4.8%	5.3%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.53	0.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.10%	10.60%

Tax rate	22.80%	23.80%
Debt/Equity ratio	0.3	0.3
Cost of debt	4.00%	6.60%

After-tax WACC	6.9%	9.3%


Selected WACC	8.1%

AFHL.TA'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 AFHL.TA:

cost_of_equity (9.35%) = risk_free_rate (5.05%) + equity_risk_premium (6.60%) * adjusted_beta (0.53) + 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.