The WACC of Phuc Hung Holdings Construction JSC (PHC.VN) is 5.2%.
| Range | Selected | |
| Cost of equity | 7.40% - 12.90% | 10.15% |
| Tax rate | 20.00% - 22.80% | 21.40% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 3.9% - 6.6% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.49 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.40% | 12.90% |
| Tax rate | 20.00% | 22.80% |
| Debt/Equity ratio | 5.51 | 5.51 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 3.9% | 6.6% |
| Selected WACC | 5.2% | |
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 PHC.VN:
cost_of_equity (10.15%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.49) + 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.