The WACC of Hi Gold Ocean Kmarin No.12 Ship Investment Co (172580.KS) is 6.0%.
| Range | Selected | |
| Cost of equity | 6.70% - 10.00% | 8.35% |
| Tax rate | 25.00% - 25.00% | 25.00% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.2% - 6.9% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.5% | 4.0% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.61 | 0.88 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.70% | 10.00% |
| Tax rate | 25.00% | 25.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.2% | 6.9% |
| Selected WACC | 6.0% | |
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 172580.KS:
cost_of_equity (8.35%) = risk_free_rate (3.75%) + equity_risk_premium (5.70%) * adjusted_beta (0.61) + 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.