The WACC of Kia Motors Corp (000270.KS) is 9.4%.
| Range | Selected | |
| Cost of equity | 9.50% - 12.00% | 10.75% |
| Tax rate | 26.80% - 27.70% | 27.25% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 8.3% - 10.4% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.11 | 1.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.50% | 12.00% |
| Tax rate | 26.80% | 27.70% |
| Debt/Equity ratio | 0.22 | 0.22 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 8.3% | 10.4% |
| Selected WACC | 9.4% | |
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 000270.KS:
cost_of_equity (10.75%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.11) + 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.