The WACC of China Bills Finance Corp (2820.TW) is 10.7%.
| Range | Selected | |
| Cost of equity | 9.70% - 13.20% | 11.45% |
| Tax rate | 16.30% - 18.30% | 17.30% |
| Cost of debt | 4.00% - 22.00% | 13.00% |
| WACC | 3.9% - 17.6% | 10.7% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.28 | 1.46 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.70% | 13.20% |
| Tax rate | 16.30% | 18.30% |
| Debt/Equity ratio | 10.78 | 10.78 |
| Cost of debt | 4.00% | 22.00% |
| After-tax WACC | 3.9% | 17.6% |
| Selected WACC | 10.7% | |
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 2820.TW:
cost_of_equity (11.45%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.28) + 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.