The WACC of Kee Tai Properties Co Ltd (2538.TW) is 8.8%.
| Range | Selected | |
| Cost of equity | 5.30% - 7.30% | 6.30% |
| Tax rate | 5.90% - 7.60% | 6.75% |
| Cost of debt | 4.00% - 19.00% | 11.50% |
| WACC | 4.4% - 13.3% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.54 | 0.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.30% | 7.30% |
| Tax rate | 5.90% | 7.60% |
| Debt/Equity ratio | 1.39 | 1.39 |
| Cost of debt | 4.00% | 19.00% |
| After-tax WACC | 4.4% | 13.3% |
| Selected WACC | 8.8% | |
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 2538.TW:
cost_of_equity (6.30%) = risk_free_rate (2.25%) + 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.