The WACC of Leaders Cosmetics Co Ltd (016100.KQ) is 7.7%.
| Range | Selected | |
| Cost of equity | 8.20% - 11.80% | 10.00% |
| Tax rate | 24.10% - 37.40% | 30.75% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 6.3% - 9.1% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.89 | 1.14 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.20% | 11.80% |
| Tax rate | 24.10% | 37.40% |
| Debt/Equity ratio | 0.6 | 0.6 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 6.3% | 9.1% |
| Selected WACC | 7.7% | |
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 016100.KQ:
cost_of_equity (10.00%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.89) + 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.