The WACC of Rothwell International Co Ltd (900260.KQ) is 7.6%.
| Range | Selected | |
| Cost of equity | 17.20% - 24.80% | 21.00% |
| Tax rate | 0.40% - 3.10% | 1.75% |
| Cost of debt | 4.30% - 4.60% | 4.45% |
| WACC | 6.8% - 8.5% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 2.9% | 3.4% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 2.4 | 3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.20% | 24.80% |
| Tax rate | 0.40% | 3.10% |
| Debt/Equity ratio | 4.09 | 4.09 |
| Cost of debt | 4.30% | 4.60% |
| After-tax WACC | 6.8% | 8.5% |
| Selected WACC | 7.6% | |
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 900260.KQ:
cost_of_equity (21.00%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (2.4) + 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.