083930.KQ WACC - Weighted Average Cost of Capital

The WACC of Avaco Co Ltd (083930.KQ) is 11.3%.

The Cost of Equity of Avaco Co Ltd (083930.KQ) is 11.90%.

The Cost of Debt of Avaco Co Ltd (083930.KQ) is 5.60%.

	Range	Selected
Cost of equity	10.30% - 13.50%	11.90%
Tax rate	17.00% - 19.70%	18.35%
Cost of debt	4.00% - 7.20%	5.60%
WACC	9.8% - 12.9%	11.3%

WACC

083930.KQ WACC calculation

Category	Low	High

Long-term bond rate	3.1%	3.6%
Equity market risk premium	5.8%	6.8%
Adjusted beta	1.25	1.38

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	13.50%

Tax rate	17.00%	19.70%
Debt/Equity ratio	0.09	0.09
Cost of debt	4.00%	7.20%

After-tax WACC	9.8%	12.9%


Selected WACC	11.3%

083930.KQ's CAPM model and how its cost of Equity is calculated

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 083930.KQ:

cost_of_equity (11.90%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.25) + 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.