The WACC of Tonlin Department Store Co Ltd (2910.TW) is 4.9%.
| Range | Selected | |
| Cost of equity | 4.90% - 7.00% | 5.95% |
| Tax rate | 14.40% - 20.40% | 17.40% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 4.3% - 5.6% | 4.9% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.4 | 0.5 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 4.90% | 7.00% |
| Tax rate | 14.40% | 20.40% |
| Debt/Equity ratio | 0.72 | 0.72 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 4.3% | 5.6% |
| Selected WACC | 4.9% | |
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 2910.TW:
cost_of_equity (5.95%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.4) + 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.