The WACC of Pyung Hwa Industrial Co Ltd (090080.KS) is 6.5%.
| Range | Selected | |
| Cost of equity | 7.30% - 11.10% | 9.20% |
| Tax rate | 14.10% - 17.00% | 15.55% |
| Cost of debt | 4.80% - 6.00% | 5.40% |
| WACC | 5.5% - 7.6% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.72 | 1.02 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.30% | 11.10% |
| Tax rate | 14.10% | 17.00% |
| Debt/Equity ratio | 1.34 | 1.34 |
| Cost of debt | 4.80% | 6.00% |
| After-tax WACC | 5.5% | 7.6% |
| Selected WACC | 6.5% | |
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 090080.KS:
cost_of_equity (9.20%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.72) + 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.