2390.HK WACC - Weighted Average Cost of Capital

The WACC of Zhihu Inc (2390.HK) is 11.0%.

The Cost of Equity of Zhihu Inc (2390.HK) is 17.15%.

The Cost of Debt of Zhihu Inc (2390.HK) is 5.00%.

	Range	Selected
Cost of equity	14.20% - 20.10%	17.15%
Tax rate	0.70% - 1.10%	0.90%
Cost of debt	5.00% - 5.00%	5.00%
WACC	9.6% - 12.5%	11.0%

WACC

2390.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.89	2.32

Additional risk adjustments	0.0%	0.5%
Cost of equity	14.20%	20.10%

Tax rate	0.70%	1.10%
Debt/Equity ratio	1	1
Cost of debt	5.00%	5.00%

After-tax WACC	9.6%	12.5%


Selected WACC	11.0%

2390.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 2390.HK:

cost_of_equity (17.15%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.89) + 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.