The WACC of An Gia Real Estate Investment and Development Corp (AGG.VN) is 9.4%.
| Range | Selected | |
| Cost of equity | 6.20% - 8.50% | 7.35% |
| Tax rate | 14.30% - 17.20% | 15.75% |
| Cost of debt | 8.40% - 22.70% | 15.55% |
| WACC | 6.5% - 12.2% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.36 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.20% | 8.50% |
| Tax rate | 14.30% | 17.20% |
| Debt/Equity ratio | 0.57 | 0.57 |
| Cost of debt | 8.40% | 22.70% |
| After-tax WACC | 6.5% | 12.2% |
| Selected WACC | 9.4% | |
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 AGG.VN:
cost_of_equity (7.35%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.36) + 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.