The WACC of Hwaseung Corporation Co Ltd (013520.KS) is 5.2%.
| Range | Selected | |
| Cost of equity | 12.00% - 21.30% | 16.65% |
| Tax rate | 30.00% - 40.60% | 35.30% |
| Cost of debt | 4.70% - 5.30% | 5.00% |
| WACC | 4.6% - 5.9% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.54 | 2.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.00% | 21.30% |
| Tax rate | 30.00% | 40.60% |
| Debt/Equity ratio | 5.65 | 5.65 |
| Cost of debt | 4.70% | 5.30% |
| After-tax WACC | 4.6% | 5.9% |
| Selected WACC | 5.2% | |
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 013520.KS:
cost_of_equity (16.65%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.54) + 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.