The WACC of China Techfaith Wireless Communication Technology Ltd (CNTFY) is 6.2%.
Range | Selected | |
Cost of equity | 32.9% - 69.8% | 51.35% |
Tax rate | 1.7% - 4.9% | 3.3% |
Cost of debt | 4.0% - 7.0% | 5.5% |
WACC | 4.5% - 7.9% | 6.2% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 4.2% | 5.2% |
Adjusted beta | 7.02 | 12.53 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 32.9% | 69.8% |
Tax rate | 1.7% | 4.9% |
Debt/Equity ratio | 51.62 | 51.62 |
Cost of debt | 4.0% | 7.0% |
After-tax WACC | 4.5% | 7.9% |
Selected WACC | 6.2% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
CNTFY | China Techfaith Wireless Communication Technology Ltd | 51.62 | 572.28 | 11.19 |
GPTX | Global Payment Technologies Inc | 50893.55 | 0 | 0 |
IGOI | iGO Inc | 0.92 | 0.89 | 0.47 |
IINX | Ionix Technology Inc | 78.16 | 179.7 | 2.34 |
JRVS | iMine Corp | 0.01 | 3.55 | 3.5 |
OSS | One Stop Systems Inc | 0.01 | 1.45 | 1.43 |
OTIVF | On Track Innovations Ltd | 1.95 | 0.81 | 0.28 |
SCT.V | Skychain Technologies Inc | 0.95 | 0.62 | 0.32 |
SONM | Sonim Technologies Inc | 0.17 | 0.03 | 0.02 |
VRTC | Veritec Inc | 2249.56 | 0.28 | 0 |
Low | High | |
Unlevered beta | 0.3 | 0.85 |
Relevered beta | 9.99 | 18.21 |
Adjusted relevered beta | 7.02 | 12.53 |
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 CNTFY:
cost_of_equity (51.35%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (7.02) + 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.