986.HK
China Environmental Energy Investment Ltd
Price:  
0.10 
HKD
Volume:  
1,390,500.00
Hong Kong | Distributors
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986.HK WACC - Weighted Average Cost of Capital

The WACC of China Environmental Energy Investment Ltd (986.HK) is 5.8%.

The Cost of Equity of China Environmental Energy Investment Ltd (986.HK) is 5.85%.
The Cost of Debt of China Environmental Energy Investment Ltd (986.HK) is 5.55%.

Range Selected
Cost of equity 5.10% - 6.60% 5.85%
Tax rate 2.10% - 4.70% 3.40%
Cost of debt 4.10% - 7.00% 5.55%
WACC 4.9% - 6.6% 5.8%
WACC

986.HK WACC calculation

Category Low High
Long-term bond rate 2.9% 3.4%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.37 0.39
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.10% 6.60%
Tax rate 2.10% 4.70%
Debt/Equity ratio 0.2 0.2
Cost of debt 4.10% 7.00%
After-tax WACC 4.9% 6.6%
Selected WACC 5.8%

986.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 986.HK:

cost_of_equity (5.85%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.37) + 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.