The WACC of Elentec Co Ltd (054210.KQ) is 8.8%.
| Range | Selected | |
| Cost of equity | 13.30% - 17.10% | 15.20% |
| Tax rate | 10.80% - 17.60% | 14.20% |
| Cost of debt | 4.10% - 6.70% | 5.40% |
| WACC | 7.4% - 10.1% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.75 | 1.91 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.30% | 17.10% |
| Tax rate | 10.80% | 17.60% |
| Debt/Equity ratio | 1.53 | 1.53 |
| Cost of debt | 4.10% | 6.70% |
| After-tax WACC | 7.4% | 10.1% |
| Selected WACC | 8.8% | |
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 054210.KQ:
cost_of_equity (15.20%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.75) + 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.