The WACC of BCB Bhd (BCB.KL) is 6.3%.
| Range | Selected | |
| Cost of equity | 11.30% - 18.20% | 14.75% |
| Tax rate | 36.70% - 37.90% | 37.30% |
| Cost of debt | 5.70% - 6.90% | 6.30% |
| WACC | 5.2% - 7.3% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 1.1 | 1.71 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.30% | 18.20% |
| Tax rate | 36.70% | 37.90% |
| Debt/Equity ratio | 3.63 | 3.63 |
| Cost of debt | 5.70% | 6.90% |
| After-tax WACC | 5.2% | 7.3% |
| Selected WACC | 6.3% | |
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 BCB.KL:
cost_of_equity (14.75%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (1.1) + 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.