The WACC of American Vietnamese Biotech Inc (AMV.VN) is 6.4%.
| Range | Selected | |
| Cost of equity | 6.90% - 10.20% | 8.55% |
| Tax rate | 2.20% - 4.30% | 3.25% |
| Cost of debt | 4.00% - 4.50% | 4.25% |
| WACC | 5.4% - 7.3% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.43 | 0.61 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 10.20% |
| Tax rate | 2.20% | 4.30% |
| Debt/Equity ratio | 0.95 | 0.95 |
| Cost of debt | 4.00% | 4.50% |
| After-tax WACC | 5.4% | 7.3% |
| Selected WACC | 6.4% | |
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 AMV.VN:
cost_of_equity (8.55%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.43) + 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.