The WACC of Chokwang Paint Co Ltd (004910.KS) is 10.5%.
| Range | Selected | |
| Cost of equity | 8.30% - 12.20% | 10.25% |
| Tax rate | 5.80% - 13.30% | 9.55% |
| Cost of debt | 4.00% - 20.10% | 12.05% |
| WACC | 5.1% - 15.9% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.91 | 1.19 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.30% | 12.20% |
| Tax rate | 5.80% | 13.30% |
| Debt/Equity ratio | 2.34 | 2.34 |
| Cost of debt | 4.00% | 20.10% |
| After-tax WACC | 5.1% | 15.9% |
| Selected WACC | 10.5% | |
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 004910.KS:
cost_of_equity (10.25%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.91) + 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.