The WACC of Posco ICT Co Ltd (022100.KQ) is 10.2%.
| Range | Selected | |
| Cost of equity | 9.10% - 11.30% | 10.20% |
| Tax rate | 20.70% - 24.70% | 22.70% |
| Cost of debt | 4.60% - 7.70% | 6.15% |
| WACC | 9.1% - 11.3% | 10.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 6.2% | 7.2% |
| Adjusted beta | 0.84 | 0.89 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.10% | 11.30% |
| Tax rate | 20.70% | 24.70% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.60% | 7.70% |
| After-tax WACC | 9.1% | 11.3% |
| Selected WACC | 10.2% | |
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 022100.KQ:
cost_of_equity (10.20%) = risk_free_rate (4.15%) + equity_risk_premium (6.70%) * adjusted_beta (0.84) + 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.