002284.SZ WACC - Weighted Average Cost of Capital

The WACC of Zhejiang Asia-Pacific Mechanical & Electronic Co Ltd (002284.SZ) is 9.2%.

The Cost of Equity of Zhejiang Asia-Pacific Mechanical & Electronic Co Ltd (002284.SZ) is 10.50%.

The Cost of Debt of Zhejiang Asia-Pacific Mechanical & Electronic Co Ltd (002284.SZ) is 5.00%.

	Range	Selected
Cost of equity	9.10% - 11.90%	10.50%
Tax rate	5.70% - 7.30%	6.50%
Cost of debt	5.00% - 5.00%	5.00%
WACC	8.1% - 10.2%	9.2%

WACC

002284.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.06	1.15

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	11.90%

Tax rate	5.70%	7.30%
Debt/Equity ratio	0.3	0.3
Cost of debt	5.00%	5.00%

After-tax WACC	8.1%	10.2%


Selected WACC	9.2%

002284.SZ's CAPM model and how its cost of Equity is calculated

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 002284.SZ:

cost_of_equity (10.50%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.06) + 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.