The WACC of IDJ Vietnam Investment JSC (IDJ.VN) is 11.5%.
| Range | Selected | |
| Cost of equity | 10.20% - 15.60% | 12.90% |
| Tax rate | 20.50% - 20.90% | 20.70% |
| Cost of debt | 4.00% - 7.20% | 5.60% |
| WACC | 9.1% - 14.0% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.78 | 1.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.20% | 15.60% |
| Tax rate | 20.50% | 20.90% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 4.00% | 7.20% |
| After-tax WACC | 9.1% | 14.0% |
| Selected WACC | 11.5% | |
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 IDJ.VN:
cost_of_equity (12.90%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.78) + 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.