The WACC of Taeyang Metal Industrial Co Ltd (004100.KS) is 7.7%.
| Range | Selected | |
| Cost of equity | 6.30% - 9.00% | 7.65% |
| Tax rate | 25.00% - 25.00% | 25.00% |
| Cost of debt | 5.60% - 14.90% | 10.25% |
| WACC | 4.9% - 10.5% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.56 | 0.73 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.30% | 9.00% |
| Tax rate | 25.00% | 25.00% |
| Debt/Equity ratio | 2.09 | 2.09 |
| Cost of debt | 5.60% | 14.90% |
| After-tax WACC | 4.9% | 10.5% |
| Selected WACC | 7.7% | |
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 004100.KS:
cost_of_equity (7.65%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.56) + 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.