CHNC WACC - Weighted Average Cost of Capital

The WACC of China Infrastructure Construction Corp (CHNC) is 7.4%.

The Cost of Equity of China Infrastructure Construction Corp (CHNC) is 13.75%.

The Cost of Debt of China Infrastructure Construction Corp (CHNC) is 4.90%.

	Range	Selected
Cost of equity	11.00% - 16.50%	13.75%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	4.90% - 4.90%	4.90%
WACC	6.4% - 8.4%	7.4%

WACC

CHNC WACC calculation

Category	Low	High

Long-term bond rate	4.2%	4.7%
Equity market risk premium	5.0%	6.0%
Adjusted beta	1.36	1.89

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.00%	16.50%

Tax rate	26.20%	27.00%
Debt/Equity ratio	1.7	1.7
Cost of debt	4.90%	4.90%

After-tax WACC	6.4%	8.4%


Selected WACC	7.4%

CHNC'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 CHNC:

cost_of_equity (13.75%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.36) + 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.