LIZI
Lizhi Inc
Price:  
2.8 
USD
Volume:  
145,331
China | Entertainment

LIZI WACC - Weighted Average Cost of Capital

The WACC of Lizhi Inc (LIZI) is 9.0%.

The Cost of Equity of Lizhi Inc (LIZI) is 11.75%.
The Cost of Debt of Lizhi Inc (LIZI) is 5%.

RangeSelected
Cost of equity8.1% - 15.4%11.75%
Tax rate0.1% - 0.3%0.2%
Cost of debt5.0% - 5.0%5%
WACC6.9% - 11.1%9.0%
WACC

LIZI WACC calculation

CategoryLowHigh
Long-term bond rate4.2%4.7%
Equity market risk premium4.6%5.6%
Adjusted beta0.861.83
Additional risk adjustments0.0%0.5%
Cost of equity8.1%15.4%
Tax rate0.1%0.3%
Debt/Equity ratio
0.690.69
Cost of debt5.0%5.0%
After-tax WACC6.9%11.1%
Selected WACC9.0%

LIZI'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 LIZI:

cost_of_equity (11.75%) = risk_free_rate (4.45%) + equity_risk_premium (5.10%) * adjusted_beta (0.86) + 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.