The WACC of Petrovietnam Machinery Technology JSC (PVM.VN) is 9.8%.
| Range | Selected | |
| Cost of equity | 7.80% - 12.00% | 9.90% |
| Tax rate | 1.10% - 2.40% | 1.75% |
| Cost of debt | 7.00% - 12.60% | 9.80% |
| WACC | 7.6% - 12.1% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 2.7% | 3.2% |
| Equity market risk premium | 9.5% | 10.5% |
| Adjusted beta | 0.53 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.80% | 12.00% |
| Tax rate | 1.10% | 2.40% |
| Debt/Equity ratio | 0.32 | 0.32 |
| Cost of debt | 7.00% | 12.60% |
| After-tax WACC | 7.6% | 12.1% |
| Selected WACC | 9.8% | |
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 PVM.VN:
cost_of_equity (9.90%) = risk_free_rate (2.95%) + equity_risk_premium (10.00%) * adjusted_beta (0.53) + 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.