The WACC of Cuong Thuan Idico Development Investment Corp (CTI.VN) is 7.7%.
| Range | Selected | |
| Cost of equity | 11.50% - 18.60% | 15.05% |
| Tax rate | 13.60% - 13.90% | 13.75% |
| Cost of debt | 5.00% - 5.10% | 5.05% |
| WACC | 6.5% - 8.9% | 7.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.92 | 1.42 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.50% | 18.60% |
| Tax rate | 13.60% | 13.90% |
| Debt/Equity ratio | 2.21 | 2.21 |
| Cost of debt | 5.00% | 5.10% |
| After-tax WACC | 6.5% | 8.9% |
| Selected WACC | 7.7% | |
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 CTI.VN:
cost_of_equity (15.05%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.92) + 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.