The WACC of KNJ Co Ltd (272110.KQ) is 8.0%.
| Range | Selected | |
| Cost of equity | 8.00% - 11.70% | 9.85% |
| Tax rate | 8.40% - 12.40% | 10.40% |
| Cost of debt | 4.00% - 4.80% | 4.40% |
| WACC | 6.6% - 9.3% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.8% | 6.8% |
| Adjusted beta | 0.85 | 1.11 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.00% | 11.70% |
| Tax rate | 8.40% | 12.40% |
| Debt/Equity ratio | 0.47 | 0.47 |
| Cost of debt | 4.00% | 4.80% |
| After-tax WACC | 6.6% | 9.3% |
| Selected WACC | 8.0% | |
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 272110.KQ:
cost_of_equity (9.85%) = risk_free_rate (3.35%) + equity_risk_premium (6.30%) * adjusted_beta (0.85) + 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.