The WACC of Test Rite International Co Ltd (2908.TW) is 6.9%.
| Range | Selected | |
| Cost of equity | 4.70% - 6.90% | 5.80% |
| Tax rate | 12.50% - 17.20% | 14.85% |
| Cost of debt | 4.00% - 13.80% | 8.90% |
| WACC | 3.9% - 9.8% | 6.9% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.36 | 0.48 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 4.70% | 6.90% |
| Tax rate | 12.50% | 17.20% |
| Debt/Equity ratio | 1.8 | 1.8 |
| Cost of debt | 4.00% | 13.80% |
| After-tax WACC | 3.9% | 9.8% |
| Selected WACC | 6.9% | |
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 2908.TW:
cost_of_equity (5.80%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.