17.HK WACC - Weighted Average Cost of Capital

The WACC of New World Development Co Ltd (17.HK) is 5.0%.

The Cost of Equity of New World Development Co Ltd (17.HK) is 12.70%.

The Cost of Debt of New World Development Co Ltd (17.HK) is 5.60%.

	Range	Selected
Cost of equity	9.10% - 16.30%	12.70%
Tax rate	22.10% - 22.30%	22.20%
Cost of debt	4.20% - 7.00%	5.60%
WACC	3.7% - 6.3%	5.0%

WACC

17.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.04	1.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	16.30%

Tax rate	22.10%	22.30%
Debt/Equity ratio	11.63	11.63
Cost of debt	4.20%	7.00%

After-tax WACC	3.7%	6.3%


Selected WACC	5.0%

17.HK's CAPM model and how its cost of Equity is calculated

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 17.HK:

cost_of_equity (12.70%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.04) + 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.