The WACC of Grand Ocean Retail Group Ltd (5907.TW) is 8.6%.
| Range | Selected | |
| Cost of equity | 5.50% - 8.90% | 7.20% |
| Tax rate | 27.20% - 36.00% | 31.60% |
| Cost of debt | 4.70% - 22.00% | 13.35% |
| WACC | 3.7% - 13.6% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 2.0% | 2.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.58 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.50% | 8.90% |
| Tax rate | 27.20% | 36.00% |
| Debt/Equity ratio | 9.26 | 9.26 |
| Cost of debt | 4.70% | 22.00% |
| After-tax WACC | 3.7% | 13.6% |
| Selected WACC | 8.6% | |
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 5907.TW:
cost_of_equity (7.20%) = risk_free_rate (2.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.58) + 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.