The WACC of Daishin Securities Co Ltd (003540.KS) is 4.5%.
| Range | Selected | |
| Cost of equity | 9.60% - 19.90% | 14.75% |
| Tax rate | 27.40% - 29.20% | 28.30% |
| Cost of debt | 4.70% - 6.20% | 5.45% |
| WACC | 3.8% - 5.3% | 4.5% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.12 | 2.31 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 19.90% |
| Tax rate | 27.40% | 29.20% |
| Debt/Equity ratio | 16.79 | 16.79 |
| Cost of debt | 4.70% | 6.20% |
| After-tax WACC | 3.8% | 5.3% |
| Selected WACC | 4.5% | |
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 003540.KS:
cost_of_equity (14.75%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.12) + 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.