1725.HK WACC - Weighted Average Cost of Capital

The WACC of Eternity Technology Holdings Ltd (1725.HK) is 9.5%.

The Cost of Equity of Eternity Technology Holdings Ltd (1725.HK) is 15.75%.

The Cost of Debt of Eternity Technology Holdings Ltd (1725.HK) is 6.85%.

	Range	Selected
Cost of equity	10.40% - 21.10%	15.75%
Tax rate	1.40% - 6.20%	3.80%
Cost of debt	6.70% - 7.00%	6.85%
WACC	7.8% - 11.1%	9.5%

WACC

1725.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.26	2.47

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.40%	21.10%

Tax rate	1.40%	6.20%
Debt/Equity ratio	2.18	2.18
Cost of debt	6.70%	7.00%

After-tax WACC	7.8%	11.1%


Selected WACC	9.5%

1725.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 1725.HK:

cost_of_equity (15.75%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.26) + 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.