Aberdeen Emerging Markets Equity Income Fund Inc (AEF) WACC Analysis

As of May 29, 2025, Aberdeen Emerging Markets Equity Income Fund Inc (AEF) carries a Weighted Average Cost of Capital (WACC) of 10.7%. WACC reflects the blended rate Aberdeen Emerging Markets Equity Income Fund Inc must pay to both equity and debt holders.

Within that, the cost of equity is 10.5%, the cost of debt is 4.0%, and the effective tax rate is 26.2%.

Breakdown of WACC Components

• Long-term bond rate: 3.9% – 4.4%
• Equity market risk premium: 4.6% – 5.6%
• Adjusted beta: 1.45 – 1.45
• Additional risk adjustment: 0.0% – 0.5%
• Debt-to-equity ratio: 0.16

What It Means for Investors

With a selected WACC of 10.7%, Aberdeen Emerging Markets Equity Income Fund Inc must ensure any new investment returns exceed this threshold to generate shareholder value. This level reflects a relatively high financing requirement.