The WACC of Southern Packaging Group Ltd (BQP.SI) is 9.8%.
| Range | Selected | |
| Cost of equity | 5.30% - 9.10% | 7.20% |
| Tax rate | 11.90% - 16.00% | 13.95% |
| Cost of debt | 5.10% - 19.70% | 12.40% |
| WACC | 4.7% - 15.0% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.51 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.30% | 9.10% |
| Tax rate | 11.90% | 16.00% |
| Debt/Equity ratio | 3.99 | 3.99 |
| Cost of debt | 5.10% | 19.70% |
| After-tax WACC | 4.7% | 15.0% |
| Selected WACC | 9.8% | |
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 BQP.SI:
cost_of_equity (7.20%) = risk_free_rate (2.95%) + equity_risk_premium (5.60%) * adjusted_beta (0.51) + 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.