The WACC of Vietnam Machinery Installation Corp JSC (LLM.VN) is 12.5%.
| Range | Selected | |
| Cost of equity | 15.50% - 18.90% | 17.20% |
| Tax rate | 22.10% - 22.30% | 22.20% |
| Cost of debt | 5.40% - 14.50% | 9.95% |
| WACC | 9.9% - 15.1% | 12.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.35 | 1.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.50% | 18.90% |
| Tax rate | 22.10% | 22.30% |
| Debt/Equity ratio | 0.98 | 0.98 |
| Cost of debt | 5.40% | 14.50% |
| After-tax WACC | 9.9% | 15.1% |
| Selected WACC | 12.5% | |
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 LLM.VN:
cost_of_equity (17.20%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.35) + 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.