The WACC of Korea Asset Investment Securities Co Ltd (190650.KQ) is 12.3%.
| Range | Selected | |
| Cost of equity | 7.60% - 10.00% | 8.80% |
| Tax rate | 24.30% - 27.90% | 26.10% |
| Cost of debt | 4.00% - 38.30% | 21.15% |
| WACC | 5.2% - 19.4% | 12.3% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.78 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.60% | 10.00% |
| Tax rate | 24.30% | 27.90% |
| Debt/Equity ratio | 1.16 | 1.16 |
| Cost of debt | 4.00% | 38.30% |
| After-tax WACC | 5.2% | 19.4% |
| Selected WACC | 12.3% | |
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 190650.KQ:
cost_of_equity (8.80%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.78) + 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.