The WACC of Petrovienam Securities Inc (PSI.VN) is 10.9%.
| Range | Selected | |
| Cost of equity | 28.60% - 35.90% | 32.25% |
| Tax rate | 13.60% - 19.80% | 16.70% |
| Cost of debt | 6.40% - 7.10% | 6.75% |
| WACC | 10.1% - 11.7% | 10.9% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 2.72 | 3.06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 28.60% | 35.90% |
| Tax rate | 13.60% | 19.80% |
| Debt/Equity ratio | 4.02 | 4.02 |
| Cost of debt | 6.40% | 7.10% |
| After-tax WACC | 10.1% | 11.7% |
| Selected WACC | 10.9% | |
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 (32.25%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (2.72) + 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.