The WACC of Hansol Paper Co Ltd (213500.KS) is 8.2%.
| Range | Selected | |
| Cost of equity | 6.00% - 8.40% | 7.20% |
| Tax rate | 27.30% - 30.40% | 28.85% |
| Cost of debt | 4.00% - 20.10% | 12.05% |
| WACC | 3.5% - 12.9% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.51 | 0.64 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 8.40% |
| Tax rate | 27.30% | 30.40% |
| Debt/Equity ratio | 4.27 | 4.27 |
| Cost of debt | 4.00% | 20.10% |
| After-tax WACC | 3.5% | 12.9% |
| Selected WACC | 8.2% | |
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 213500.KS:
cost_of_equity (7.20%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.51) + 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.