The WACC of Duong Hieu Trading and Mining JSC (DHM.VN) is 12.6%.
| Range | Selected | |
| Cost of equity | 7.10% - 10.80% | 8.95% |
| Tax rate | 0.80% - 12.20% | 6.50% |
| Cost of debt | 8.50% - 22.70% | 15.60% |
| WACC | 8.0% - 17.2% | 12.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.45 | 0.67 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.10% | 10.80% |
| Tax rate | 0.80% | 12.20% |
| Debt/Equity ratio | 2.29 | 2.29 |
| Cost of debt | 8.50% | 22.70% |
| After-tax WACC | 8.0% | 17.2% |
| Selected WACC | 12.6% | |
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 DHM.VN:
cost_of_equity (8.95%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.45) + 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.