The WACC of Kingold Jewelry Inc (KGJI) is 11.7%.
| Range | Selected | |
| Cost of equity | 5.50% - 1,954,379.10% | 977,192.30% |
| Tax rate | 26.00% - 26.10% | 26.05% |
| Cost of debt | 14.50% - 15.60% | 15.05% |
| WACC | 10.8% - 12.6% | 11.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.36 | 348995.39 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.50% | 1,954,379.10% |
| Tax rate | 26.00% | 26.10% |
| Debt/Equity ratio | 1.81166062e+06 | 1.81166062e+06 |
| Cost of debt | 14.50% | 15.60% |
| After-tax WACC | 10.8% | 12.6% |
| Selected WACC | 11.7% | |
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 KGJI:
cost_of_equity (977,192.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.