The WACC of Puda Coal Inc (PUDA) is 5.0%.
| Range | Selected | |
| Cost of equity | 2,045,882.80% - 2,718,803.70% | 2,382,343.25% |
| Tax rate | 35.20% - 41.30% | 38.25% |
| Cost of debt | 4.50% - 6.50% | 5.50% |
| WACC | 4.3% - 5.7% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 444756.28 | 485499.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 2,045,882.80% | 2,718,803.70% |
| Tax rate | 35.20% | 41.30% |
| Debt/Equity ratio | 1.4278481e+06 | 1.4278481e+06 |
| Cost of debt | 4.50% | 6.50% |
| After-tax WACC | 4.3% | 5.7% |
| Selected WACC | 5.0% | |
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 PUDA:
cost_of_equity (2,382,343.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (444756.28) + 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.