The WACC of Lotte Chemical Titan Holding Bhd (LCTITAN.KL) is 68.1%.
| Range | Selected | |
| Cost of equity | 5.00% - 18.50% | 11.75% |
| Tax rate | 18.10% - 20.00% | 19.05% |
| Cost of debt | 7.00% - 172.30% | 89.65% |
| WACC | 5.7% - 130.5% | 68.1% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.03 | 1.62 |
| Additional risk adjustments | 1.0% | 1.5% |
| Cost of equity | 5.00% | 18.50% |
| Tax rate | 18.10% | 20.00% |
| Debt/Equity ratio | 15.07 | 15.07 |
| Cost of debt | 7.00% | 172.30% |
| After-tax WACC | 5.7% | 130.5% |
| Selected WACC | 68.1% | |
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 LCTITAN.KL:
cost_of_equity (11.75%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.03) + risk_adjustments (1.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.