CREG WACC - Weighted Average Cost of Capital
The WACC of China Recycling Energy Corp (CREG) is 8.2%.
| Range | Selected | |
| Cost of equity | 6.1% - 12.2% | 9.15% |
| Tax rate | 0.7% - 1.2% | 0.95% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.8% - 10.6% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.48 | 1.32 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 12.2% |
| Tax rate | 0.7% | 1.2% |
| Debt/Equity ratio | 0.29 | 0.29 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.8% | 10.6% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CREG | China Recycling Energy Corp | 0.29 | 1.45 | 1.12 |
| BLM.V | Blumetric Environmental Inc | 0.05 | 1.28 | 1.21 |
| BNET | Bion Environmental Technologies Inc | 0.36 | 1.78 | 1.31 |
| EWK.V | Earthworks Industries Inc | 0.72 | -0.25 | -0.15 |
| EWS.V | Environmental Waste International Inc | 2.54 | 1.03 | 0.29 |
| KUT.V | Redishred Capital Corp (Pre-Merger) | 0.39 | 0.01 | 0.01 |
| NNRI | NNRF Inc | 0.04 | 1.77 | 1.7 |
| PESI | Perma-Fix Environmental Services Inc | 0.02 | 1.19 | 1.17 |
| TEXC | Texcom Inc | 22.58 | -1.66 | -0.07 |
| Low | High | |
| Unlevered beta | 0.46 | 1.16 |
| Relevered beta | 0.22 | 1.48 |
| Adjusted relevered beta | 0.48 | 1.32 |
CREG'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 CREG:
cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.