The WACC of Shinil Electronics Co Ltd (002700.KS) is 6.4%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.00% | 6.85% |
| Tax rate | 26.40% - 31.10% | 28.75% |
| Cost of debt | 5.80% - 6.20% | 6.00% |
| WACC | 5.5% - 7.4% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.46 | 0.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.00% |
| Tax rate | 26.40% | 31.10% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 5.80% | 6.20% |
| After-tax WACC | 5.5% | 7.4% |
| Selected WACC | 6.4% | |
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 002700.KS:
cost_of_equity (6.85%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.46) + 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.