The WACC of China Clean Energy Inc (CCGY) is 3.5%.
| Range | Selected | |
| Cost of equity | 237.40% - 2,590.20% | 1,413.80% |
| Tax rate | 34.00% - 38.40% | 36.20% |
| Cost of debt | 4.50% - 4.50% | 4.50% |
| WACC | 3.1% - 4.0% | 3.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 50.78 | 461.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 237.40% | 2,590.20% |
| Tax rate | 34.00% | 38.40% |
| Debt/Equity ratio | 2138.81 | 2138.81 |
| Cost of debt | 4.50% | 4.50% |
| After-tax WACC | 3.1% | 4.0% |
| Selected WACC | 3.5% | |
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 CCGY:
cost_of_equity (1,413.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (50.78) + 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.