The WACC of Lida Holdings Ltd (4552.TW) is 8.3%.
| Range | Selected | |
| Cost of equity | 7.50% - 10.30% | 8.90% |
| Tax rate | 33.00% - 34.30% | 33.65% |
| Cost of debt | 4.70% - 7.00% | 5.85% |
| WACC | 7.0% - 9.7% | 8.3% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.91 | 1.04 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.50% | 10.30% |
| Tax rate | 33.00% | 34.30% |
| Debt/Equity ratio | 0.13 | 0.13 |
| Cost of debt | 4.70% | 7.00% |
| After-tax WACC | 7.0% | 9.7% |
| Selected WACC | 8.3% | |
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 4552.TW:
cost_of_equity (8.90%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.91) + 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.