The WACC of Lentuo International Inc (LASLY) is 9.4%.
| Range | Selected | |
| Cost of equity | 591.00% - 853.90% | 722.45% |
| Tax rate | 31.10% - 42.70% | 36.90% |
| Cost of debt | 9.10% - 14.60% | 11.85% |
| WACC | 8.0% - 10.8% | 9.4% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 138.65 | 162.17 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 591.00% | 853.90% |
| Tax rate | 31.10% | 42.70% |
| Debt/Equity ratio | 345.85 | 345.85 |
| Cost of debt | 9.10% | 14.60% |
| After-tax WACC | 8.0% | 10.8% |
| Selected WACC | 9.4% | |
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 LASLY:
cost_of_equity (722.45%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (138.65) + 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.