The WACC of Billionton Systems Inc (6172.TW) is 6.4%.
| Range | Selected | |
| Cost of equity | 5.60% - 8.50% | 7.05% |
| Tax rate | 8.30% - 13.70% | 11.00% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.2% - 7.6% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 1.8% | 2.3% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.71 | 0.9 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.60% | 8.50% |
| Tax rate | 8.30% | 13.70% |
| Debt/Equity ratio | 0.25 | 0.25 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.2% | 7.6% |
| Selected WACC | 6.4% | |
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 6172.TW:
cost_of_equity (7.05%) = risk_free_rate (2.05%) + equity_risk_premium (5.80%) * adjusted_beta (0.71) + 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.