The WACC of Phong Phu Corp (PPH.VN) is 11.6%.
| Range | Selected | |
| Cost of equity | 10.00% - 12.70% | 11.35% |
| Tax rate | 0.70% - 0.80% | 0.75% |
| Cost of debt | 4.70% - 19.70% | 12.20% |
| WACC | 8.2% - 15.0% | 11.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.76 | 0.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 10.00% | 12.70% |
| Tax rate | 0.70% | 0.80% |
| Debt/Equity ratio | 0.49 | 0.49 |
| Cost of debt | 4.70% | 19.70% |
| After-tax WACC | 8.2% | 15.0% |
| 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 PPH.VN:
cost_of_equity (11.35%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.76) + 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.