The WACC of Laocai Mineral Exploitation and Processing JSC (LCM.VN) is 9.7%.
| Range | Selected | |
| Cost of equity | 13.20% - 17.90% | 15.55% |
| Tax rate | 22.50% - 22.60% | 22.55% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 8.5% - 10.9% | 9.7% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 1.2 | 1.47 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.20% | 17.90% |
| Tax rate | 22.50% | 22.60% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 8.5% | 10.9% |
| Selected WACC | 9.7% | |
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 LCM.VN:
cost_of_equity (15.55%) = risk_free_rate (3.55%) + equity_risk_premium (8.80%) * adjusted_beta (1.2) + 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.