The WACC of Hana Financial Fourteen Special Purpose Acquisition Co (332710.KQ) is 9.2%.
| Range | Selected | |
| Cost of equity | 8.70% - 10.90% | 9.80% |
| Tax rate | 20.40% - 22.00% | 21.20% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.2% - 10.1% | 9.2% |
| Category | Low | High |
| Long-term bond rate | 3.5% | 4.0% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 1 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.70% | 10.90% |
| Tax rate | 20.40% | 22.00% |
| Debt/Equity ratio | 0.12 | 0.12 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.2% | 10.1% |
| Selected WACC | 9.2% | |
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 332710.KQ:
cost_of_equity (9.80%) = risk_free_rate (3.75%) + equity_risk_premium (5.70%) * adjusted_beta (1) + 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.