The WACC of Daou Data Corp (032190.KQ) is 5.3%.
| Range | Selected | |
| Cost of equity | 40.10% - 60.00% | 50.05% |
| Tax rate | 28.50% - 31.00% | 29.75% |
| Cost of debt | 4.60% - 8.30% | 6.45% |
| WACC | 3.9% - 6.7% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 6.36 | 8.2 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 40.10% | 60.00% |
| Tax rate | 28.50% | 31.00% |
| Debt/Equity ratio | 56.65 | 56.65 |
| Cost of debt | 4.60% | 8.30% |
| After-tax WACC | 3.9% | 6.7% |
| Selected WACC | 5.3% | |
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 032190.KQ:
cost_of_equity (50.05%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (6.36) + 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.