The WACC of OCH Hospitality & Service JSC (OCH.VN) is 8.5%.
| Range | Selected | |
| Cost of equity | 10.40% - 13.80% | 12.10% |
| Tax rate | 15.40% - 19.70% | 17.55% |
| Cost of debt | 6.40% - 6.40% | 6.40% |
| WACC | 7.7% - 9.2% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.81 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.40% | 13.80% |
| Tax rate | 15.40% | 19.70% |
| Debt/Equity ratio | 1.14 | 1.14 |
| Cost of debt | 6.40% | 6.40% |
| After-tax WACC | 7.7% | 9.2% |
| Selected WACC | 8.5% | |
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 OCH.VN:
cost_of_equity (12.10%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.81) + 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.