The WACC of Dongbang Transport & Logistics Co Ltd (004140.KS) is 7.0%.
| Range | Selected | |
| Cost of equity | 10.40% - 16.90% | 13.65% |
| Tax rate | 18.80% - 28.30% | 23.55% |
| Cost of debt | 5.20% - 6.20% | 5.70% |
| WACC | 6.0% - 8.0% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.26 | 1.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.40% | 16.90% |
| Tax rate | 18.80% | 28.30% |
| Debt/Equity ratio | 2.47 | 2.47 |
| Cost of debt | 5.20% | 6.20% |
| After-tax WACC | 6.0% | 8.0% |
| Selected WACC | 7.0% | |
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 004140.KS:
cost_of_equity (13.65%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.26) + 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.