The WACC of Petrolimex International Trading JSC (PIT.VN) is 12.2%.
| Range | Selected | |
| Cost of equity | 5.70% - 8.40% | 7.05% |
| Tax rate | 1.00% - 7.70% | 4.35% |
| Cost of debt | 8.30% - 22.70% | 15.50% |
| WACC | 7.4% - 17.1% | 12.2% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.31 | 0.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.70% | 8.40% |
| Tax rate | 1.00% | 7.70% |
| Debt/Equity ratio | 2.21 | 2.21 |
| Cost of debt | 8.30% | 22.70% |
| After-tax WACC | 7.4% | 17.1% |
| Selected WACC | 12.2% | |
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 PIT.VN:
cost_of_equity (7.05%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.31) + 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.