The WACC of Kwang Jin Ind Co Ltd (026910.KQ) is 6.4%.
| Range | Selected | |
| Cost of equity | 9.60% - 19.40% | 14.50% |
| Tax rate | 24.70% - 27.50% | 26.10% |
| Cost of debt | 5.10% - 6.20% | 5.65% |
| WACC | 5.0% - 7.7% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.12 | 2.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.60% | 19.40% |
| Tax rate | 24.70% | 27.50% |
| Debt/Equity ratio | 3.67 | 3.67 |
| Cost of debt | 5.10% | 6.20% |
| After-tax WACC | 5.0% | 7.7% |
| Selected WACC | 6.4% | |
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 026910.KQ:
cost_of_equity (14.50%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.12) + 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.