The WACC of Sangsangin Investment & Securities Co Ltd (001290.KS) is 5.4%.
| Range | Selected | |
| Cost of equity | 8.80% - 15.40% | 12.10% |
| Tax rate | 8.80% - 12.20% | 10.50% |
| Cost of debt | 5.30% - 6.00% | 5.65% |
| WACC | 5.0% - 5.8% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.98 | 1.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.80% | 15.40% |
| Tax rate | 8.80% | 12.20% |
| Debt/Equity ratio | 17.74 | 17.74 |
| Cost of debt | 5.30% | 6.00% |
| After-tax WACC | 5.0% | 5.8% |
| Selected WACC | 5.4% | |
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 001290.KS:
cost_of_equity (12.10%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.98) + 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.