The WACC of Kolon Industries Inc (120110.KS) is 7.8%.
| Range | Selected | |
| Cost of equity | 6.70% - 10.30% | 8.50% |
| Tax rate | 15.50% - 22.20% | 18.85% |
| Cost of debt | 4.10% - 14.90% | 9.50% |
| WACC | 4.3% - 11.2% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.61 | 0.92 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 10.30% |
| Tax rate | 15.50% | 22.20% |
| Debt/Equity ratio | 2.82 | 2.82 |
| Cost of debt | 4.10% | 14.90% |
| After-tax WACC | 4.3% | 11.2% |
| Selected WACC | 7.8% | |
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 120110.KS:
cost_of_equity (8.50%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.61) + 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.