LEDS
SemiLEDs Corp
Price:  
2.22 
USD
Volume:  
27,353.00
Taiwan, Province of China | Semiconductors & Semiconductor Equipment
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LEDS WACC - Weighted Average Cost of Capital

The WACC of SemiLEDs Corp (LEDS) is 6.7%.

The Cost of Equity of SemiLEDs Corp (LEDS) is 7.25%.
The Cost of Debt of SemiLEDs Corp (LEDS) is 5.95%.

Range Selected
Cost of equity 6.40% - 8.10% 7.25%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.90% - 7.00% 5.95%
WACC 5.9% - 7.6% 6.7%
WACC

LEDS WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.58
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 8.10%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.2 0.2
Cost of debt 4.90% 7.00%
After-tax WACC 5.9% 7.6%
Selected WACC 6.7%

LEDS's CAPM model and how its cost of Equity is calculated

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 LEDS:

cost_of_equity (7.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.