1985.HK WACC - Weighted Average Cost of Capital

The WACC of Microware Group Ltd (1985.HK) is 7.5%.

The Cost of Equity of Microware Group Ltd (1985.HK) is 7.65%.

The Cost of Debt of Microware Group Ltd (1985.HK) is 4.40%.

	Range	Selected
Cost of equity	6.10% - 9.20%	7.65%
Tax rate	15.70% - 16.80%	16.25%
Cost of debt	4.00% - 4.80%	4.40%
WACC	6.0% - 9.0%	7.5%

WACC

1985.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.54	0.77

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.10%	9.20%

Tax rate	15.70%	16.80%
Debt/Equity ratio	0.05	0.05
Cost of debt	4.00%	4.80%

After-tax WACC	6.0%	9.0%


Selected WACC	7.5%

1985.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 1985.HK:

cost_of_equity (7.65%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.54) + 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.