The WACC of Shin Tai Industry Co Ltd (1235.TW) is 7.9%.
| Range | Selected | |
| Cost of equity | 5.10% - 7.60% | 6.35% |
| Tax rate | 6.50% - 7.40% | 6.95% |
| Cost of debt | 4.00% - 22.00% | 13.00% |
| WACC | 4.8% - 11.0% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.35 | 0.51 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.10% | 7.60% |
| Tax rate | 6.50% | 7.40% |
| Debt/Equity ratio | 0.36 | 0.36 |
| Cost of debt | 4.00% | 22.00% |
| After-tax WACC | 4.8% | 11.0% |
| Selected WACC | 7.9% | |
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 1235.TW:
cost_of_equity (6.35%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.35) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.