1958.HK
BAIC Motor Corp Ltd
Price:  
2.02 
HKD
Volume:  
8,906,000
China | Automobiles

1958.HK WACC - Weighted Average Cost of Capital

The WACC of BAIC Motor Corp Ltd (1958.HK) is 8.2%.

The Cost of Equity of BAIC Motor Corp Ltd (1958.HK) is 11.6%.
The Cost of Debt of BAIC Motor Corp Ltd (1958.HK) is 4.25%.

RangeSelected
Cost of equity9.6% - 13.6%11.6%
Tax rate34.6% - 35.7%35.15%
Cost of debt4.0% - 4.5%4.25%
WACC7.0% - 9.5%8.2%
WACC

1958.HK WACC calculation

CategoryLowHigh
Long-term bond rate2.9%3.4%
Equity market risk premium6.0%7.0%
Adjusted beta1.131.39
Additional risk adjustments0.0%0.5%
Cost of equity9.6%13.6%
Tax rate34.6%35.7%
Debt/Equity ratio
0.610.61
Cost of debt4.0%4.5%
After-tax WACC7.0%9.5%
Selected WACC8.2%

1958.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 1958.HK:

cost_of_equity (11.60%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.13) + 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.