17.HK
New World Development Co Ltd
Price:  
5.55 
HKD
Volume:  
18,012,212
Hong Kong | Real Estate Management & Development

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 12.7%.
The Cost of Debt of New World Development Co Ltd (17.HK) is 5.6%.

RangeSelected
Cost of equity9.1% - 16.3%12.7%
Tax rate22.1% - 22.3%22.2%
Cost of debt4.2% - 7.0%5.6%
WACC3.7% - 6.3%5.0%
WACC

17.HK WACC calculation

CategoryLowHigh
Long-term bond rate2.9%3.4%
Equity market risk premium6.0%7.0%
Adjusted beta1.041.77
Additional risk adjustments0.0%0.5%
Cost of equity9.1%16.3%
Tax rate22.1%22.3%
Debt/Equity ratio
11.6311.63
Cost of debt4.2%7.0%
After-tax WACC3.7%6.3%
Selected WACC5.0%

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.