The WACC of Lotte Chemical Titan Holding Bhd (LCTITAN.KL) is 62.6%.
| Range | Selected | |
| Cost of equity | 9.90% - 25.00% | 17.45% |
| Tax rate | 20.60% - 22.90% | 21.75% |
| Cost of debt | 7.00% - 173.80% | 90.40% |
| WACC | 6.2% - 119.0% | 62.6% |
| Category | Low | High |
| Long-term bond rate | 3.8% | 4.3% |
| Equity market risk premium | 6.9% | 7.8% |
| Adjusted beta | 0.89 | 2.57 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.90% | 25.00% |
| Tax rate | 20.60% | 22.90% |
| Debt/Equity ratio | 6.29 | 6.29 |
| Cost of debt | 7.00% | 173.80% |
| After-tax WACC | 6.2% | 119.0% |
| Selected WACC | 62.6% | |
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 (17.45%) = risk_free_rate (4.05%) + equity_risk_premium (7.35%) * adjusted_beta (0.89) + 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.