The WACC of Cn Asia Corporation Bhd (CNASIA.KL) is 5.8%.
| Range | Selected | |
| Cost of equity | 4.80% - 6.70% | 5.75% |
| Tax rate | 0.90% - 1.40% | 1.15% |
| Cost of debt | 5.00% - 7.00% | 6.00% |
| WACC | 4.9% - 6.8% | 5.8% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.08 | 0.18 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 4.80% | 6.70% |
| Tax rate | 0.90% | 1.40% |
| Debt/Equity ratio | 0.65 | 0.65 |
| Cost of debt | 5.00% | 7.00% |
| After-tax WACC | 4.9% | 6.8% |
| Selected WACC | 5.8% | |
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 CNASIA.KL:
cost_of_equity (5.75%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.08) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.