6816.HK WACC - Weighted Average Cost of Capital

The WACC of Prosper Construction Holdings Ltd (6816.HK) is 5.0%.

The Cost of Equity of Prosper Construction Holdings Ltd (6816.HK) is 49.10%.

The Cost of Debt of Prosper Construction Holdings Ltd (6816.HK) is 5.50%.

	Range	Selected
Cost of equity	37.30% - 60.90%	49.10%
Tax rate	29.30% - 44.60%	36.95%
Cost of debt	4.00% - 7.00%	5.50%
WACC	4.0% - 5.9%	5.0%

WACC

6816.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	5.76	8.17

Additional risk adjustments	0.0%	0.5%
Cost of equity	37.30%	60.90%

Tax rate	29.30%	44.60%
Debt/Equity ratio	27.45	27.45
Cost of debt	4.00%	7.00%

After-tax WACC	4.0%	5.9%


Selected WACC	5.0%

6816.HK'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 6816.HK:

cost_of_equity (49.10%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (5.76) + 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.