8406.HK WACC - Weighted Average Cost of Capital

The WACC of Alpha Era International Holdings Ltd (8406.HK) is 10.8%.

The Cost of Equity of Alpha Era International Holdings Ltd (8406.HK) is 10.90%.

The Cost of Debt of Alpha Era International Holdings Ltd (8406.HK) is 8.10%.

	Range	Selected
Cost of equity	9.30% - 12.50%	10.90%
Tax rate	2.00% - 8.50%	5.25%
Cost of debt	7.00% - 9.20%	8.10%
WACC	9.2% - 12.3%	10.8%

WACC

8406.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	1.08	1.23

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.30%	12.50%

Tax rate	2.00%	8.50%
Debt/Equity ratio	0.04	0.04
Cost of debt	7.00%	9.20%

After-tax WACC	9.2%	12.3%


Selected WACC	10.8%

8406.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 8406.HK:

cost_of_equity (10.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (1.08) + 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.