The WACC of LDG Investment JSC (LDG.VN) is 11.5%.
| Range | Selected | |
| Cost of equity | 23.80% - 29.00% | 26.40% |
| Tax rate | 16.70% - 31.30% | 24.00% |
| Cost of debt | 4.20% - 7.00% | 5.60% |
| WACC | 10.2% - 12.8% | 11.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 2.22 | 2.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 23.80% | 29.00% |
| Tax rate | 16.70% | 31.30% |
| Debt/Equity ratio | 2.03 | 2.03 |
| Cost of debt | 4.20% | 7.00% |
| After-tax WACC | 10.2% | 12.8% |
| Selected WACC | 11.5% | |
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 LDG.VN:
cost_of_equity (26.40%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (2.22) + 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.