The WACC of Seoyon E Hwa Co Ltd (200880.KS) is 6.0%.
| Range | Selected | |
| Cost of equity | 11.40% - 14.70% | 13.05% |
| Tax rate | 30.00% - 37.30% | 33.65% |
| Cost of debt | 4.30% - 4.60% | 4.45% |
| WACC | 5.6% - 6.5% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 1.42 | 1.56 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.40% | 14.70% |
| Tax rate | 30.00% | 37.30% |
| Debt/Equity ratio | 2.28 | 2.28 |
| Cost of debt | 4.30% | 4.60% |
| After-tax WACC | 5.6% | 6.5% |
| 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 200880.KS:
cost_of_equity (13.05%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (1.42) + 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.