The WACC of Duc Quan Investment and Development JSC (FTM.VN) is 6.4%.
| Range | Selected | |
| Cost of equity | 9.30% - 14.30% | 11.80% |
| Tax rate | -% - 3.80% | 1.90% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.8% - 7.9% | 6.4% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.72 | 1.08 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.30% | 14.30% |
| Tax rate | -% | 3.80% |
| Debt/Equity ratio | 5.27 | 5.27 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.8% | 7.9% |
| Selected WACC | 6.4% | |
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 FTM.VN:
cost_of_equity (11.80%) = risk_free_rate (3.55%) + equity_risk_premium (8.80%) * adjusted_beta (0.72) + 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.