The WACC of Ecmoho Ltd (MOHO) is 7.5%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.40% | 7.05% |
| Tax rate | 4.40% - 5.40% | 4.90% |
| Cost of debt | 7.00% - 9.40% | 8.20% |
| WACC | 6.2% - 8.7% | 7.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.59 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.40% |
| Tax rate | 4.40% | 5.40% |
| Debt/Equity ratio | 1.23 | 1.23 |
| Cost of debt | 7.00% | 9.40% |
| After-tax WACC | 6.2% | 8.7% |
| Selected WACC | 7.5% | |
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 MOHO:
cost_of_equity (7.05%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.59) + 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.