The WACC of Hyundai Motor Co (005380.KS) is 6.2%.
| Range | Selected | |
| Cost of equity | 10.80% - 15.50% | 13.15% |
| Tax rate | 25.30% - 26.40% | 25.85% |
| Cost of debt | 4.00% - 6.70% | 5.35% |
| WACC | 4.9% - 7.5% | 6.2% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.32 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.80% | 15.50% |
| Tax rate | 25.30% | 26.40% |
| Debt/Equity ratio | 3.06 | 3.06 |
| Cost of debt | 4.00% | 6.70% |
| After-tax WACC | 4.9% | 7.5% |
| Selected WACC | 6.2% | |
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 005380.KS:
cost_of_equity (13.15%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.32) + 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.