The WACC of Kwong Fong Industries Corp (1416.TW) is 7.7%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.70% | 6.50% |
| Tax rate | 13.60% - 19.40% | 16.50% |
| Cost of debt | 4.00% - 22.00% | 13.00% |
| WACC | 4.8% - 10.7% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.55 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.30% | 7.70% |
| Tax rate | 13.60% | 19.40% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 4.00% | 22.00% |
| After-tax WACC | 4.8% | 10.7% |
| Selected WACC | 7.7% | |
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 1416.TW:
cost_of_equity (6.50%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * 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.