The WACC of Seowon Co Ltd (021050.KS) is 11.6%.
| Range | Selected | |
| Cost of equity | 18.50% - 24.80% | 21.65% |
| Tax rate | 10.40% - 31.60% | 21.00% |
| Cost of debt | 8.10% - 20.10% | 14.10% |
| WACC | 8.4% - 14.8% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 2.65 | 3.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.50% | 24.80% |
| Tax rate | 10.40% | 31.60% |
| Debt/Equity ratio | 8.86 | 8.86 |
| Cost of debt | 8.10% | 20.10% |
| After-tax WACC | 8.4% | 14.8% |
| Selected WACC | 11.6% | |
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 021050.KS:
cost_of_equity (21.65%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (2.65) + 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.