2801.TW WACC - Weighted Average Cost of Capital
The WACC of Chang Hwa Commercial Bank Ltd (2801.TW) is 5.4%.
| Range | Selected | |
| Cost of equity | 4.7% - 6.6% | 5.65% |
| Tax rate | 15.7% - 17.0% | 16.35% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 4.6% - 6.2% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.44 | 0.52 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.7% | 6.6% |
| Tax rate | 15.7% | 17.0% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 4.6% | 6.2% |
| Selected WACC | 5.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 2801.TW | Chang Hwa Commercial Bank Ltd | 0.25 | 0.27 | 0.22 |
| 2834.TW | Taiwan Business Bank Ltd | 0.4 | 0.47 | 0.35 |
| 2880.TW | Hua Nan Financial Holdings Co Ltd | 0.46 | 0.34 | 0.25 |
| 2887.TW | Taishin Financial Holding Co Ltd | 0.86 | -0.01 | -0.01 |
| 2890.TW | Sinopac Financial Holdings Co Ltd | 0.76 | 0.56 | 0.34 |
| 2891.TW | CTBC Financial Holding Co Ltd | 0.52 | 0.08 | 0.05 |
| 2892.TW | First Financial Holding Co Ltd | 0.36 | 0.32 | 0.25 |
| 2897.TW | O-Bank Co Ltd | 8 | 0.47 | 0.06 |
| 5876.TW | Shanghai Commercial & Savings Bank Ltd | 0.29 | 0.07 | 0.06 |
| 5880.TW | Taiwan Cooperative Financial Holding Co Ltd | 0.53 | 0.28 | 0.19 |
| Low | High | |
| Unlevered beta | 0.14 | 0.23 |
| Relevered beta | 0.16 | 0.28 |
| Adjusted relevered beta | 0.44 | 0.52 |
2801.TW'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 2801.TW:
cost_of_equity (5.65%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + 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.