The WACC of Petrovienam Securities Inc (PSI.VN) is 11.7%.
| Range | Selected | |
| Cost of equity | 31.40% - 42.10% | 36.75% |
| Tax rate | 13.60% - 19.80% | 16.70% |
| Cost of debt | 6.40% - 7.10% | 6.75% |
| WACC | 10.6% - 12.9% | 11.7% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 3.01 | 3.65 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 31.40% | 42.10% |
| Tax rate | 13.60% | 19.80% |
| Debt/Equity ratio | 4.08 | 4.08 |
| Cost of debt | 6.40% | 7.10% |
| After-tax WACC | 10.6% | 12.9% |
| Selected WACC | 11.7% | |
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 (36.75%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (3.01) + 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.