The WACC of Binh Duong Producing and Trading Corp (PRT.VN) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.20% - 9.30% | 8.25% |
| Tax rate | 16.10% - 17.50% | 16.80% |
| Cost of debt | 4.00% - 5.90% | 4.95% |
| WACC | 6.9% - 9.0% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.47 | 0.53 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.20% | 9.30% |
| Tax rate | 16.10% | 17.50% |
| Debt/Equity ratio | 0.07 | 0.07 |
| Cost of debt | 4.00% | 5.90% |
| After-tax WACC | 6.9% | 9.0% |
| Selected WACC | 8.0% | |
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 PRT.VN:
cost_of_equity (8.25%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.47) + 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.