The WACC of Petrolimex Installation No III JSC (PEN.VN) is 11.6%.
| Range | Selected | |
| Cost of equity | 6.00% - 9.00% | 7.50% |
| Tax rate | 3.40% - 6.70% | 5.05% |
| Cost of debt | 8.40% - 22.70% | 15.55% |
| WACC | 7.2% - 16.1% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.35 | 0.5 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.00% | 9.00% |
| Tax rate | 3.40% | 6.70% |
| Debt/Equity ratio | 1.36 | 1.36 |
| Cost of debt | 8.40% | 22.70% |
| After-tax WACC | 7.2% | 16.1% |
| Selected WACC | 11.6% | |
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 PEN.VN:
cost_of_equity (7.50%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.35) + 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.