The WACC of China Nonferrous Gold Ltd (CNG.L) is 13.1%.
| Range | Selected | |
| Cost of equity | 11.80% - 42.90% | 27.35% |
| Tax rate | 3.90% - 8.50% | 6.20% |
| Cost of debt | 4.00% - 24.00% | 14.00% |
| WACC | 4.0% - 22.3% | 13.1% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.3 | 5.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.80% | 42.90% |
| Tax rate | 3.90% | 8.50% |
| Debt/Equity ratio | 57.51 | 57.51 |
| Cost of debt | 4.00% | 24.00% |
| After-tax WACC | 4.0% | 22.3% |
| Selected WACC | 13.1% | |
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 CNG.L:
cost_of_equity (27.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.3) + 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.