600295.SS WACC - Weighted Average Cost of Capital

The WACC of Inner Mongolia ERDOS Resources Co Ltd (600295.SS) is 8.5%.

The Cost of Equity of Inner Mongolia ERDOS Resources Co Ltd (600295.SS) is 10.20%.

The Cost of Debt of Inner Mongolia ERDOS Resources Co Ltd (600295.SS) is 5.00%.

	Range	Selected
Cost of equity	8.90% - 11.50%	10.20%
Tax rate	15.50% - 16.90%	16.20%
Cost of debt	5.00% - 5.00%	5.00%
WACC	7.6% - 9.5%	8.5%

WACC

600295.SS WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	1.01	1.1

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.90%	11.50%

Tax rate	15.50%	16.90%
Debt/Equity ratio	0.39	0.39
Cost of debt	5.00%	5.00%

After-tax WACC	7.6%	9.5%


Selected WACC	8.5%

600295.SS's CAPM model and how its cost of Equity is calculated

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 600295.SS:

cost_of_equity (10.20%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (1.01) + 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.