The WACC of Danawa Co Ltd (119860.KQ) is 22.9%.
| Range | Selected | |
| Cost of equity | 6.30% - 9.40% | 7.85% |
| Tax rate | 19.60% - 20.10% | 19.85% |
| Cost of debt | 5.30% - 182.30% | 93.80% |
| WACC | 5.8% - 40.0% | 22.9% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.55 | 0.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.30% | 9.40% |
| Tax rate | 19.60% | 20.10% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 5.30% | 182.30% |
| After-tax WACC | 5.8% | 40.0% |
| Selected WACC | 22.9% | |
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 119860.KQ:
cost_of_equity (7.85%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.55) + 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.