The WACC of Daedong Industrial Co Ltd (000490.KS) is 11.6%.
| Range | Selected | |
| Cost of equity | 9.90% - 20.10% | 15.00% |
| Tax rate | 20.40% - 27.10% | 23.75% |
| Cost of debt | 5.40% - 23.10% | 14.25% |
| WACC | 5.6% - 17.6% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.17 | 2.36 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.90% | 20.10% |
| Tax rate | 20.40% | 27.10% |
| Debt/Equity ratio | 3.25 | 3.25 |
| Cost of debt | 5.40% | 23.10% |
| After-tax WACC | 5.6% | 17.6% |
| Selected WACC | 11.6% | |
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 000490.KS:
cost_of_equity (15.00%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.17) + 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.