The WACC of KBI Dongkook Ind Co Ltd (001620.KS) is 5.5%.
| Range | Selected | |
| Cost of equity | 10.20% - 14.60% | 12.40% |
| Tax rate | 31.80% - 32.90% | 32.35% |
| Cost of debt | 4.90% - 6.20% | 5.55% |
| WACC | 4.7% - 6.3% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.23 | 1.54 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 14.60% |
| Tax rate | 31.80% | 32.90% |
| Debt/Equity ratio | 3.87 | 3.87 |
| Cost of debt | 4.90% | 6.20% |
| After-tax WACC | 4.7% | 6.3% |
| Selected WACC | 5.5% | |
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 001620.KS:
cost_of_equity (12.40%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.23) + 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.