The WACC of I-Hwa Industrial Co Ltd (1456.TW) is 10.7%.
| Range | Selected | |
| Cost of equity | 9.20% - 12.90% | 11.05% |
| Tax rate | 2.20% - 10.50% | 6.35% |
| Cost of debt | 4.30% - 19.00% | 11.65% |
| WACC | 4.8% - 16.5% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.19 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.20% | 12.90% |
| Tax rate | 2.20% | 10.50% |
| Debt/Equity ratio | 7.3 | 7.3 |
| Cost of debt | 4.30% | 19.00% |
| After-tax WACC | 4.8% | 16.5% |
| Selected WACC | 10.7% | |
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 1456.TW:
cost_of_equity (11.05%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.19) + 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.