8450.HK WACC - Weighted Average Cost of Capital

The WACC of EDICO Holdings Ltd (8450.HK) is 6.4%.

The Cost of Equity of EDICO Holdings Ltd (8450.HK) is 6.40%.

The Cost of Debt of EDICO Holdings Ltd (8450.HK) is 7.25%.

	Range	Selected
Cost of equity	5.50% - 7.30%	6.40%
Tax rate	2.90% - 9.30%	6.10%
Cost of debt	7.00% - 7.50%	7.25%
WACC	5.5% - 7.2%	6.4%

WACC

8450.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.27	0.34

Additional risk adjustments	1.0%	1.5%
Cost of equity	5.50%	7.30%

Tax rate	2.90%	9.30%
Debt/Equity ratio	0.02	0.02
Cost of debt	7.00%	7.50%

After-tax WACC	5.5%	7.2%


Selected WACC	6.4%

8450.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 8450.HK:

cost_of_equity (6.40%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.27) + risk_adjustments (1.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.