The WACC of I.D.I International Development and Investment Corp (IDI.VN) is 8.4%.
| Range | Selected | |
| Cost of equity | 16.50% - 27.40% | 21.95% |
| Tax rate | 17.20% - 25.10% | 21.15% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 6.4% - 10.5% | 8.4% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.45 | 2.25 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 16.50% | 27.40% |
| Tax rate | 17.20% | 25.10% |
| Debt/Equity ratio | 3.24 | 3.24 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 6.4% | 10.5% |
| Selected WACC | 8.4% | |
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 IDI.VN:
cost_of_equity (21.95%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.45) + 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.