The WACC of Petrovienam Securities Inc (PSI.VN) is 7.6%.
| Range | Selected | |
| Cost of equity | 15.00% - 20.50% | 17.75% |
| Tax rate | 19.50% - 20.00% | 19.75% |
| Cost of debt | 5.90% - 6.40% | 6.15% |
| WACC | 6.9% - 8.3% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 1.29 | 1.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.00% | 20.50% |
| Tax rate | 19.50% | 20.00% |
| Debt/Equity ratio | 3.88 | 3.88 |
| Cost of debt | 5.90% | 6.40% |
| After-tax WACC | 6.9% | 8.3% |
| Selected WACC | 7.6% | |
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 PSI.VN:
cost_of_equity (17.75%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (1.29) + 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.