PWRWELL.KL WACC - Weighted Average Cost of Capital

The WACC of Powerwell Holdings Bhd (PWRWELL.KL) is 7.8%.

The Cost of Equity of Powerwell Holdings Bhd (PWRWELL.KL) is 8.05%.

The Cost of Debt of Powerwell Holdings Bhd (PWRWELL.KL) is 4.80%.

	Range	Selected
Cost of equity	6.80% - 9.30%	8.05%
Tax rate	23.00% - 27.10%	25.05%
Cost of debt	4.40% - 5.20%	4.80%
WACC	6.6% - 9.0%	7.8%

WACC

PWRWELL.KL WACC calculation

Category	Low	High

Long-term bond rate	3.8%	4.3%
Equity market risk premium	6.9%	7.8%
Adjusted beta	0.44	0.57

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.80%	9.30%

Tax rate	23.00%	27.10%
Debt/Equity ratio	0.05	0.05
Cost of debt	4.40%	5.20%

After-tax WACC	6.6%	9.0%


Selected WACC	7.8%

PWRWELL.KL'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 PWRWELL.KL:

cost_of_equity (8.05%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.44) + 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.