The WACC of Puda Coal Inc (PUDA) is 4.8%.
| Range | Selected | |
| Cost of equity | 15,988.10% - 25,106.00% | 20,547.05% |
| Tax rate | 35.20% - 41.30% | 38.25% |
| Cost of debt | 4.50% - 6.50% | 5.50% |
| WACC | 4.0% - 5.6% | 4.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3474.84 | 4482.34 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15,988.10% | 25,106.00% |
| Tax rate | 35.20% | 41.30% |
| Debt/Equity ratio | 14278.48 | 14278.48 |
| Cost of debt | 4.50% | 6.50% |
| After-tax WACC | 4.0% | 5.6% |
| Selected WACC | 4.8% | |
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 (20,547.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3474.84) + 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.