The WACC of SanDi Properties Co Ltd (1438.TW) is 5.7%.
| Range | Selected | |
| Cost of equity | 5.50% - 7.70% | 6.60% |
| Tax rate | 1.20% - 4.20% | 2.70% |
| Cost of debt | 4.00% - 7.30% | 5.65% |
| WACC | 4.3% - 7.2% | 5.7% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.4 | 0.53 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.50% | 7.70% |
| Tax rate | 1.20% | 4.20% |
| Debt/Equity ratio | 3.22 | 3.22 |
| Cost of debt | 4.00% | 7.30% |
| After-tax WACC | 4.3% | 7.2% |
| Selected WACC | 5.7% | |
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 1438.TW:
cost_of_equity (6.60%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.