The WACC of Universal Textile Co Ltd (1445.TW) is 21.3%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.60% | 6.45% |
| Tax rate | 24.60% - 32.30% | 28.45% |
| Cost of debt | 7.00% - 82.70% | 44.85% |
| WACC | 5.3% - 37.4% | 21.3% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.38 | 0.52 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.30% | 7.60% |
| Tax rate | 24.60% | 32.30% |
| Debt/Equity ratio | 1.59 | 1.59 |
| Cost of debt | 7.00% | 82.70% |
| After-tax WACC | 5.3% | 37.4% |
| Selected WACC | 21.3% | |
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 1445.TW:
cost_of_equity (6.45%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.38) + 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.