The WACC of Ke Holdings Inc (BEKE) is 8.0%.
| Range | Selected | |
| Cost of equity | 6.90% - 9.20% | 8.05% |
| Tax rate | 27.00% - 27.00% | 27.00% |
| Cost of debt | 4.00% - 7.70% | 5.85% |
| WACC | 6.9% - 9.1% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.02 | 1.07 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.90% | 9.20% |
| Tax rate | 27.00% | 27.00% |
| Debt/Equity ratio | 0 | 0 |
| Cost of debt | 4.00% | 7.70% |
| After-tax WACC | 6.9% | 9.1% |
| Selected WACC | 8.0% | |
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 BEKE:
cost_of_equity (8.05%) = risk_free_rate (2.85%) + equity_risk_premium (4.70%) * adjusted_beta (1.02) + 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.