LAIX WACC - Weighted Average Cost of Capital
The WACC of LAIX Inc (LAIX) is 5.5%.
| Range | Selected | |
| Cost of equity | 5.1% - 6.9% | 6% |
| Tax rate | 0.4% - 1.2% | 0.8% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.0% - 5.9% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.33 | 0.42 |
| Additional risk adjustments | 0.5% | 1.0% |
| Cost of equity | 5.1% | 6.9% |
| Tax rate | 0.4% | 1.2% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.0% | 5.9% |
| Selected WACC | 5.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LAIX | LAIX Inc | 0.92 | 0.99 | 0.52 |
| CHN.V | China Education Resources Inc | 1.74 | 0.36 | 0.13 |
| EDTK | Skillful Craftsman Education Technology Ltd | 0.98 | -0.3 | -0.15 |
| FEDU | Four Seasons Education (Cayman) Inc | 0.28 | 0.63 | 0.49 |
| HQGE | HQ Global Education Inc | 1.8 | -61.77 | -22.1 |
| LTRE | Learning Tree International Inc | 0.57 | -0.05 | -0.03 |
| METX | Meten Edtechx Education Group Ltd | 15.18 | 1.61 | 0.1 |
| NAUH | National American University Holdings Inc | 31.61 | -0.23 | -0.01 |
| TEDU | Tarena International Inc | 0.58 | -0.28 | -0.18 |
| VCTY | Videolocity International Inc | 33.36 | -15.93 | -0.47 |
| VTRU | Vitru Ltd | 1.5 | 0.74 | 0.3 |
| Low | High | |
| Unlevered beta | -0.03 | 0.1 |
| Relevered beta | 0 | 0.13 |
| Adjusted relevered beta | 0.33 | 0.42 |
LAIX's CAPM model and how its cost of Equity is calculated
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 LAIX:
cost_of_equity (6.00%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.33) + risk_adjustments (0.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.