The WACC of Daechang Forging Co Ltd (015230.KS) is 8.5%.
| Range | Selected | |
| Cost of equity | 7.70% - 9.90% | 8.80% |
| Tax rate | 29.10% - 29.70% | 29.40% |
| Cost of debt | 4.00% - 7.10% | 5.55% |
| WACC | 7.4% - 9.6% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.79 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.70% | 9.90% |
| Tax rate | 29.10% | 29.70% |
| Debt/Equity ratio | 0.05 | 0.05 |
| Cost of debt | 4.00% | 7.10% |
| After-tax WACC | 7.4% | 9.6% |
| Selected WACC | 8.5% | |
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 015230.KS:
cost_of_equity (8.80%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.79) + 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.